Gitanjali Gems promoter, others barred from trading in stock market

Gitanjali Gems promoter, others barred from trading in stock market

At a time a slow market have turned things difficult for jewellers, Choksi and entities dealing in Gitanjali shares have come under regulatory glare.

One of the country's top diamond merchants Mehul Choksi, Prime SecuritiesBSE -4.90 %, a broker, and more than a dozen other entities that dealt in Choksi-controlled Gitanjali GemsBSE -4.98 % have been barred from trading in the stock market for six months. 

National Stock Exchange, which is investigating the unusual volatility in the Gitanjali stock and its subsequent crash, has disabled the unique client codes for as many as 26 entities which were active traders in the counter. Shares of Gitanjali Gems have fallen nearly 80% to Rs 115.6 since June 24. 

Gitanjali, like other diamond houses andgold merchants, has been facing difficulties following Reserve Bank of India's recent restrictions on gold imports. Bankers are also reviewing exposure limits to many diamond houses, which traditionally operated on a high leverage. 

Gitanjali is among the very few listed jewellery companies. "I'm not aware of this. I don't want to comment," Choksi told ET over the phone. 

At a time a slow market and credit crunch have turned things difficult for jewellers, Choksi and entities dealing in Gitanjali shares have come under regulatory glare. 

The entities facing NSE ban include Albers Diamonds, Avtar Gems, CLT Investment, CSA Holding, Facet Electronics, Fender Mercantile, Jaiwanti Mercantiles, Jinal Infratech, Jinal Mercantile, Magnifique Gems, Manoj Madhav, Mehul Choksi, Pinky Agro, Prime Research, Prime Securities, Primesec Investments, Rhoda Infrastructure, Rishabh Technomarine, Sadhiv Mercantile, Sancheti Properties, Sarvin Mercantile, Shraddha Garments, Sneaking Infrastructure, Somerset Infrastructure, Trusha Infrastructure and Vankars Gem & Jewelleries. 

Significantly, Trusha and Sarvin, which are among the banned entities, have filed FIRs withMumbai police against Prime Broking. The link between Prime, Gitanjali and these clients is a complex one. Many of these investors purchased Gitanjali shares through Prime Broking, which allegedly pledged these without their consent to take exposure on the derivatives segment of NSE. 

Gitanjali, which owns brands like Nakshatra, Gili and D'Damas, is currently negotiating with a clutch of banks to convert their non-fund exposure into funded credit lines

Source : By ET Bureau