KSK Energy Ventures sinks 20% as traders short

Hyderabad-based mid-cap power generation company KSK Energy Ventures tumbled 20% on the stock market on Wednesday. Dealers said that the stock could have been oversold short ahead of the delivery of un-tendered shares from a recent open offer.

Promoter companies had offered to buy back 20% shareholding at Rs 125 per share, a substantial premium over the stock which has been trading in Rs 90-110 levels. The offer expired on October 31, and un-tendered shares will be returned before November 15.

"Considering Thursday is a market holiday, it made sense to go short on the stock now and produce the returned shares on Monday to cover the short," said a dealer with a large brokerage, requesting anonymity.

Many traders whose tender partially fell through had already made a clean profit from tendered shares, and could take the risk of short-selling the remaining stock expecting a downside due to poor company performance, the dealer said. On Wednesday, the stock opened at Rs 98 on BSE and slid continuously, ending at its 52-week low of Rs 79.