MUMBAI, MAR 30: The scrip of the confectionery major, Nestle India Ltd fell by almost 10 per cent on Monday after a meteoric rise in the scrip in the last few months. An investigation by the market regulatory body, the SEBI, in the company for insider trading charges is the main reason for the fall, say brokers.On Monday, the Nestle scrip was top loser on the Bombay Stock Exchange (BSE) as the scrip fell from Rs 477 to Rs 432.25. The Nestle scrip has been in the limelight due to positive results which showed a 41 per cent rise in its net profit. But even before the results were made public, the scrip was going up and crossed the Rs 300 mark in February. The Nestle scrip was quoting at Rs 248 in mid-December 1997. It shot up to Rs 290 on January 5 and, subsequently, to Rs 332 on February 19. The volumes moved up from around 20,000 shares on the BSE in December 1997, to around 3.6 lakh in February.
Moreover, the lack of tallying in the carry-forward and delivery-based trades in the scrip attracted theattention of the Bombay Stock Exchange, which started its own probe into the matter.
The Securities & Exchange Board of India (Sebi) launched a probe into the spurt in share prices and volumes of the company before the announcement of the company's results.
The probe is being conducted against some Nestle India employees who allegedly have links with a fund-manager level employee of a leading foreign institutional investor. This individual is said to be a former employee of the company.
The spurt in volumes of Nestle, accompanied by a 33 per cent price jump, is not reflecting in the carry forward positions for the settlement ended March 20. Sources said that the deliveries have not increased proportionately and neither have the squared-off transactions and carry-forward positions."An increase in volumes has to result in either higher carryforward trades, squared off transactions or delivery-based trades. Neither of the three have increased proportionately. So where have the trades gone?" asks a BSEsource.
The company has said that they have not received any official communication from the SEBI about the investigation. It, however, promised full cooperation to the SEBI for conducting its probe.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
