Acquittal fuels rise in stocks of accused firms; markets wary

Mumbai: The shares of firms accused in the 2G spectrum scam staged a spectacular rally on the domestic bourses after a special CBI court hearing the case acquitted all the accused saying that the prosecution failed to prove the case against them.

The shares of realty major Unitech soared 11.86 per cent while the shares of DB Realty vaulted 19.89 per cent on the BSE. Similarly, Reliance Communication (RCom) and Sun TV Network also gained 4.05 per cent and 4.51 per cent respectively.  

Among the 17 individuals acquitted by the special court includes Sanjay Chandra, managing director of Unitech, three top executives of the Anil Ambani-controlled Reliance Anil Dhirubhai Ambani Group (ADAG)- Gautam Doshi, Surendra Pipara and Hari Nair, DB Realty’s key managerial personnel – Vinod Goenka and Shahid Balwa.

The court also gave clean chit to three telecom firms namely Swan Telecom (STPL), Reliance Telecom and Unitech Wireless (Tamil Nadu).

“The regulatory overhang had led to a serious disruption in their operations. Over a period of time, most of these companies witnessed erosion in value and accumulated huge amount of debt. To that extend, the verdict is sentimentally positive for these stocks. If they are able to improve their operational performance in the next two or three years, their valuations are likely to improve,” said Vinod Nair, head of fundamental research, Geojit Financial Services.

The shares of Unitech has lost almost 97 per cent since August 2007 till date from Rs 257 to Rs 7.08 till Wednesday, the shares of Reliance Communication had plunged to Rs 17.27 from Rs 530 per share.