Zee stock may open 10% lower as sentiment sours

livemint.com:

MUMBAI : Shares of Zee Entertainment Enterprises Ltd may open 10% lower on Tuesday and fall further, market participants said, as the termination of its merger with Sony Corp. group’s Indian entity sparks block deals and liquidation of long positions. Mutual funds including Aditya Birla Sun Life MF, Kotak MF, ICICI Prudential MF and Nippon India MF, hold 32.49% of Zee’s equity, while insurance companies like Life Insurance Corp., SBI Life and HDFC Life Insurance Co., hold 10.66% and foreign portfolio investors, including Norges Bank and Vanguard, etc., hold 28.19% as of the December quarter end.

“There could be large block deals, given the high institutional holding in the stock," said Chandan Taparia, SVP at Motilal Oswal Financial Services. He added that along with cash sales and long liquidation, there could be a huge build-up of shorts, which could drag down the stock to the lower 10% limit and further after market opening on Tuesday. A 10% gap-down opening could drag the stock down to ₹208.26 initially.

Specified stocks are traded on the cash and derivatives segments of exchanges like NSE and BSE. Rajesh Baheti, director of Crosseas Capital, expects the stock to test ₹200 a share, from Saturday’s closing of ₹231.40. “The question uppermost in everybody’s mind is how a person with less than 4% shareholding could hijack the deal despite the presence of a significant institutional holding.