Shares of FMCG major Nestle India and South India-based broadcasting firm Sun TV Network rebounded sharply in early trade Tuesday, snapping their four and two sessions fall, respectively, as investors resorted to value buying in these shares after the steep fall in recent sessions.
At 10.15 am, Nestle India rose 1.8 percent (Rs 96.25) to Rs 5,636 after rising to a high of Rs 5,699 a short while ago. The stock has clocked volumes of 15,000 shares on the BSE.
In the last four sessions, Nestle India stock crashed 19 percent on the bourses. From 21 May, when the company issued a clarification to the BSE on the raging controversy, the company's market capitalisation has eroded more than Rs 8,000 crore.
The company is facing serious troubles amid the raging controversy over the quality of its high brand equity noodles 'Maggi', as the government has ordered recall of its packets after tests showed high content of lead in the noodles.
According to analysts, the Maggi brand accounts for 20-25 percent of the company's total revenue from instant noodles in India.
Even as the broad market sentiment is displaying sharp volatility since the opening trades, Sun TV Network shares have rebounded sharply after bearing the brunt of intense selling in last two trading sessions.
Sun TV shares were up nearly 4 percent at Rs 290 on volumes of three lakh shares changing hands on the BSE. In the last two trading sessions, the stock tanked 22%.
In the last one year, the stock has crumbled 47 percent from its 52-week high level, while a near 30 percent erosion in stock value was seen since the beginning of this year.
Nearly Rs 3,900 crore worth of investor wealth was eroded following the crash on Monday.
Investors trimmed their exposure in the stock in recent sessions after union home ministry denied security clearance to the company's 33 channels, a move that could result in cancellation of their broadcasting licence.
In view of the current development, foreign brokerage Credit Suisse has downgraded Sun TV to neutral from outperform with a reduced target price to Rs 290 from Rs 450 a share.
Updated Date: Jun 09, 2015 15:02:15 IST