Gitanjali Gems falls for sixth day; stock tanks 10%

Shares of Gitanjali Gems closed at the lower circuit for a third straight day, eroding nearly 42% of investor wealth in the jewellery company.

The sharp decline has defied logic coming as it does in the absence of any corporate event or one that could be detrimental to its fundamentals.

So, a fall of such magnitude has raised a number of rumours in the market. One such rumour is that a clearing corporation of an exchange has dumped shares it held as collateral from a Mumbaibased broker.

The shares were held in lieu of margin that had to be put up by the broker for taking derivatives positions on the F&O counter. However, with the derivatives bets going awry and the broker unable to top up the margin, the clearing corporation had no option but to dump the shares and pay the counterparty.

Brokers can deposit securities as collateral against margin payable on trades in equity and currency futures segments with an exchange’s clearing corporation. Shares of Gitanjali ended at Rs 291.90, down 10%.

However, when contacted, Mehul Choksi, MD, Gitanjali Gems, said he was unaware of such a development.