Vedanta volume spike sparks concern
A spike in Vedanta Ltd’s delivery volumes, or the number of shares being bought and held by investors, before the formal announcement of its corporate restructuring on 29 September has raised concerns among market participants.
Vedanta saw almost 15.7 million shares change hands on 27 September, two days ahead of the formal restructuring announcement by the company. This was nearly triple the six-month average daily delivery of 5.46 million shares. Delivery as a percentage of traded volumes stood at 44.17% that day.
The increased trading activity suggests the possibility that some investors might have anticipated an important corporate development.
On 29 September, the day of the announcement, Vedanta’s share closed at ₹222.55, a 6.5% increase from the ₹209 close on 27 September. A Bloomberg report on 28 July ran the news of the restructuring a day before the formal announcement. On that day, the delivery stood at 7.8 million shares, while on the announcement day, it totalled 8.2 million shares.
Market experts raised concerns over the substantial increase in delivery prior to the demerger announcement.
“The massive jump in delivery just ahead of the demerger announcement should be looked into by the regulator,” said Shankar Sharma, founder of GQuant Investech. “The group’s problems with high debt won’t go away by the latest exercise. I think investors should take a very informed call before entering the counter.”
Another market participant, too, expressed surprise at the jump in delivery ahead of the demerger news. “Any unusual activity before a very important corporate announcement needs to be investigated,” said Rajesh Baheti, managing director of Crosseas Capital.
The delivery volume of Vedanta two days ahead of the corporate announcement was the third highest in the six months through 29 September. The highest delivery of 168.9 million shares was on 3 August when Twin Star Holdings, a unit of parent Vedanta Resources Plc, sold 154 million shares (4.1% equity) in Vedanta Ltd at a 5% discount to its previous closing to finance debt. S&P also revised the credit outlook of the parent company to negative from stable on that day, causing the share price to plummet 6.6% to ₹254.05.
The second-highest delivery was on 7 August, when 21.2 million shares changed hands as the share slid.
Vedanta’s shares continued their rally on Tuesday, gaining 3.68% to ₹230.75 on a day the National Stock Exchange’s benchmark Nifty fell 0.56% to 19,528.75.
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Updated: 03 Oct 2023, 11:56 PM IST
