Balaji’s prices fuel insider trading charges

Will insider trading be added to the script of Balaji Telefilms’ marriage with the Star group? With average daily volumes and prices shooting up substantially in the previous month, the markets are abuzz that there was insider trading at the Balaji Telefilms counter. Though market regulator Securities and Exchange Board of India (Sebi) is yet to investigate these charges of insider trading, there’s no denying that the price movement and volume in the stock is unusual. The intriguing rise in prices and volumes started on July 16, 2004 — one month before Rupert Murdoch’s Star group acquired 25% stake in the company. Data available with this newspaper shows that daily average volumes of Balaji shot up by 1,785% on the NSE, from 88,141 shares a day between June 1 and July 15 to 16.5900000 per day between July 16 and August 19. The NSE Nifty showed a rise of 6.7% from 1507.9 on June 1 to 1609.2 on August 19. The jump in average volumes in the month before the merger is stark as volume data for the preceding three months — from April 15, 2004 to July 14, 2004 — shows an average of 1.1100000 shares on the NSE. In fact, between June 23 and July 14, NSE volumes did not even touch the six-figure mark. However, it shot up subsequently and daily volumes even hit 41.8900000 on July 28 and 46.1500000 on August 5. As far as pricing goes, Balaji share price came down from Rs 70 on June 1 to Rs 62 on July 15 on the NSE. However, the price started picking up later and went up from Rs 62 on July 15 to Rs 92.25 on August 19. This is a whopping rise of 48.79%. On Thursday, however, the stock declined by nearly four% to Rs 88.60. “This is normal. Investors who acquired the shares before the announcement, unloaded the stock and pocketed a good profit. It’s very clear that some people who knew about the development were indulging in insder trading,” says BSE dealer Pawan Dharnidharka. When contacted, Balaji officials expressed surprise over the rise in volumes and prices. “I don’t know anything about it,” said a top official. When contacted, brokers felt that Sebi needed to get into the loop by procuring the trading data and the names of the brokers who executed the transactions.