Jet Airways Stock Plunges As Bourse Moves To Limit Speculative Trading
Shares of Jet Airways sunk over 23 per cent to a record low on Thursday after the country's largest stock exchange said the carrier would soon no longer be traded in the derivatives market, while day-trading in the stock would also be barred, in a bid to curb speculative trading in the troubled company.
At its lowest in the current trading session, the stock had fallen as much as 65 per cent since the airline shut down its operations in April after failing to secure funds from its lenders to keep it afloat.
As a "preventive surveillance measure", Jet's security will be moved to the 'trade for trade' segment, NSE said in a circular late Wednesday.
This means that a buyer of the stock can only sell shares purchased two days after the purchase date, and no longer trade those shares intraday, reducing speculation in the stock.
The move also means that circuit breakers will soon apply on the stock, meaning any downside or upside will be limited to 5 per cent initially and thereafter it could widen depending on trading patterns.
One market source said the NSE's moves have triggered a sharp drop in the stock, as speculative traders are exiting, ahead of the new limitations going into effect on June 28.
The stock exchange cited the grounded airline's failure to respond to queries about rumours in the market, its inability to submit its financial results for the year ended March 31, as well as observations made by the airline's auditor as reasons for the move.
"There are concerns with regard to continuity of flow of information about the company which is very vital for the appropriate price discovery in the scrip," NSE said, adding that trading may not reflect the actual status of the company.
Jet's lenders are still in talks with investors, who may consider infusing funds to revive the airline.
Jet shares marked their sharpest intraday drop in eight weeks on heavy trading volumes on Thursday. The stock was down 18 per cent at Rs 90.70 as of 2:00 pm.