2 hrs ago
Tata Shares Fall After Trusts Move to Avoid Listing
Tata Trusts proposed changing the structure of Tata Sons.
The plan would combine Tata Sons with two other Tata companies.
If approved, Tata Sons might no longer be treated as certain types of financial companies.
That could mean it would not have to sell shares to the public.
Investors reacted negatively to the proposal.
Shares of several Tata companies fell on Tuesday.
The wider Indian stock market also declined.
Foreign investors sold many shares, while domestic institutions bought some shares.
Tata Trusts proposed merging Tata Electronics Systems Solutions and Tata Consulting Engineers with Tata Sons.
The restructuring could mean Tata Sons no longer qualifies as an NBFC or CIC, avoiding a required public listing.
Tata Chemicals fell 4.20%, while Tata Investment Corporation, Tata Motors Passenger Vehicles and Tata Power also declined.
Shares of Shapoorji Pallonji group companies Afcons Infrastructure and Sterling and Wilson Renewable Energy also fell.
The Sensex dropped 0.33% and the Nifty 0.28% amid foreign selling, global concerns and monthly expiry activity.
- Who
- Tata Trusts, Tata Sons, Tata group companies and investors were involved.
- What
- Tata Trusts proposed a restructuring intended to avoid a mandatory public listing of Tata Sons, after which related shares declined.
- Where
- The developments affected Indian stock markets, including trading on the BSE and Nifty-linked markets.
- When
- The proposal was announced on Monday, and the share declines occurred on Tuesday during the monthly expiry session.
- Why
- The proposed mergers could cause Tata Sons to no longer qualify as a Non-Banking Financial Company or Core Investment Company, potentially removing the listing requirement; investors reacted negatively.
Key facts
- Proposed mergers
- Tata Electronics Systems Solutions Private Limited and Tata Consulting Engineers would merge with Tata Sons.
- Listing implication
- The reorganized entity would reportedly no longer qualify as an NBFC or CIC and therefore would not need to pursue a public listing.
- Top decliner
- Tata Chemicals closed 4.20% lower at Rs 614.70 on the BSE after falling as much as 5% intraday.
- Other Tata declines
- Tata Investment Corporation fell 3.5% intraday, Tata Motors Passenger Vehicles 3.4%, and Tata Power 2.2%.
- Market performance
- The Sensex fell 242.65 points to 72,529.07, while the Nifty fell 64.05 points to 22,716.20.
- Investor flows
- Foreign portfolio investors sold Rs 9,980.22 crore, while domestic institutional investors bought Rs 6,952.71 crore.
- Market capitalization
- The market value of BSE-listed companies declined by Rs 1.86 lakh crore to Rs 472.50 lakh crore.
Quotes
Ajit Mishra
Senior vice president of research at Religare Broking
“Markets remained under selling pressure on the monthly expiry day, extending the ongoing corrective trend. After a weak opening, the benchmark indices remained under pressure through most of the session and traded near their lowest levels in nearly six months before recovering marginally from the lows.”
financialexpress.com
Sources
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