Vakrangee is an IT company building software for banking, insurance, e-commerce, and logistics services. It was incorporated in 1990. Vakrangee is the largest Aadhar enrolment agency and generated about 3.5 crore Aadhar cards till now. The company is listed on both NSE and BSE. The company is financially strong and has given 500% returns in last 5 years. Its stock price was Rs. 505 on 25th January which has fallen by 62% to Rs. 192 on 9th February 2018. This free fall is due to the company had purchased 2 million shares of P C Jewellers for about ₹ 112 crore from the open market. There were market rumours alleged the company being investigated on price and volume manipulation.
[Source : BSE]
On 3rd February, Vakrangee has clarified that it has not received any intimation from SEBI that they are investigating the said price and volume manipulation. The company has clarified that it has not received any communication either from stock exchanges or from the market regulator. Further, the company has clarified that it has treasury fund of ₹ 1500 crore and has make a direct equity investment in P C Jewellers from the open market.
The company is doing very good business and is confident to achieve its vision 2020 by targeting 75000 Vakrangee Kendra Outlets. The stock is still a multi bagger even after a sharp fall in last week. On 9th February it has opened in a lower circuit of 5% but in the afternoon it has bounced back to 5% upper circuit and settled at ₹202.
Here the point is that – one rumour can damage the company’s market capilalization in such a short period before company get time to react or clarify.
This is called market sentiments.