Hero MotoCorp shares slump 4%, off 2-year high; what dampened D-Street mood?
Hero Moto stock, which hit an over 2-year high of Rs 3,244 in early trade, erased the gains to hit a low of Rs 3,032.25 on the National Stock Exchange. The selling came on the back of strong volumes of more than 2 million shares. This was way high...
By Vidya Sreedhar, ETMarkets.com |
ETMarkets.com
Shares of Hero MotoCorp slumped more than 4% in trade on Tuesday, hit by news that the Enforcement Directorate has conducted raids in several places in Delhi and Gurugram in a money laundering probe against the company’s Executive Chairman Pawan Munjal.
The stock, which hit an over 2-year high of Rs 3,244 in early trade, erased the gains to hit a low of Rs 3,032.25 on the National Stock Exchange.
The selling came on the back of strong volumes of more than 2 million shares. This was way higher than the six-month daily average volume of 6,15,362 shares.
The news also triggered bearish bets in the August futures contract of the stock, as open interest surged as much as 17% to 4.2 million, indicating a build-up of short positions.
The investigation stems from a Directorate of Revenue Intelligence (DRI) complaint against a person, allegedly close to Munjal, who was investigated on charges of carrying undeclared foreign currency.
In June, ET reported that the Corporate Affairs ministry had ordered an investigation against Hero MotoCorp over alleged corporate governance issues.
In March last year, the income tax department raided the company’s premises over alleged tax evasion. The IT had even covered the residence of Munjal while conducting the searches.
The CBDT, the department’s parent in a statement without naming the company, had said that it found alleged illegal business expenses of over Rs 800 crore.
With a raid news resurfacing, the mood on Dalal Street dampened and this saw the stock snapping its two-day winning streak.
The sharp fall in the stock pulled down premiums across out-of-the-money call options. The deep out-of-the-money call options saw premiums slump by over 50%. Meanwhile, premiums of out-of-the-money put options more than doubled, with open interest addition seen in Rs 3,000 and Rs 2,900 strike prices.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
The stock, which hit an over 2-year high of Rs 3,244 in early trade, erased the gains to hit a low of Rs 3,032.25 on the National Stock Exchange.
The selling came on the back of strong volumes of more than 2 million shares. This was way higher than the six-month daily average volume of 6,15,362 shares.
The news also triggered bearish bets in the August futures contract of the stock, as open interest surged as much as 17% to 4.2 million, indicating a build-up of short positions.
The investigation stems from a Directorate of Revenue Intelligence (DRI) complaint against a person, allegedly close to Munjal, who was investigated on charges of carrying undeclared foreign currency.
In June, ET reported that the Corporate Affairs ministry had ordered an investigation against Hero MotoCorp over alleged corporate governance issues.
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In March last year, the income tax department raided the company’s premises over alleged tax evasion. The IT had even covered the residence of Munjal while conducting the searches.
The CBDT, the department’s parent in a statement without naming the company, had said that it found alleged illegal business expenses of over Rs 800 crore.
With a raid news resurfacing, the mood on Dalal Street dampened and this saw the stock snapping its two-day winning streak.
The sharp fall in the stock pulled down premiums across out-of-the-money call options. The deep out-of-the-money call options saw premiums slump by over 50%. Meanwhile, premiums of out-of-the-money put options more than doubled, with open interest addition seen in Rs 3,000 and Rs 2,900 strike prices.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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