Mumbai: Tata Group stocks on Tuesday ended up to four per cent lower after Cyrus Mistry was removed as Chairman of India's largest conglomerate and replaced by his predecessor Ratan Tata in the interim, with key firms losing nearly Rs 10,700 crore collectively in market capitalisation.
Shares of Tata Steel fell by 2.51 per cent, Tata Power lost 1.5 per cent, Tata Consultancy Services slipped 1.20 per cent and Tata Motors went down by 1.07 per cent on BSE. The market valuation of TCS declined by Rs 5,753.3 crore to Rs 4,72,636.70 crore, while Tata Motors lost Rs 2,432.01 crore to Rs 1,58,990.99 crore.
The valuation of Tata Steel dropped by Rs 1,039 crore to Rs 40,354 crore and Tata Power saw an erosion of Rs 337.38 crore to Rs 22,272.62 crore.
Shares of Tata Sponge Iron dropped by 3.04 per cent, Tata Coffee declined by 2.63 per cent, Tata Global Beverages (2.47 per cent) and Tata Communications (2.26 per cent). Tata Chemicals fell by 2.09 per cent and Tata Elxsi shed 1.40 per cent. Together all these firms lost Rs 10,688.51 crore in market capitalisation.
Tata Group stocks, such as Tata Motors, TCS, Tata Steel, Tata Communications, Tata Metaliks, Titan Company and Tata Chemicals reacted sharply in early deals, and lost one percent to four percent a day after Cyrus Mistry was removed as the chairman of the Group. However, Tata Motors and Titan recovered some lost ground as trade progressed. By comparison, the benchmark indices – the S&P BSE Sensex and the Nifty 50 were trading 0.2% lower.
Tata Chemicals shed 2.09 percent or Rs12.05 and closed at Rs565.50. Tata Motors shares eased 1.07 percent to Rs553.10. TCS stock dropped by Rs29.20 or 1.20 percent to Rs2,398.65. Tata Steel fell 2.51 percent or Rs10.70 to Rs415.50. Tata Chemicals fell Rs12.05 or 2.09 percent to Rs565.50. Tata Communications eased Rs15.10 or 2.26 percent to Rs653.95. Tata Metaliks dropped Rs21 or 4.97 percent to Rs401.30. Titan Company shares dipped by Rs4.50 or 1.19 percent to Rs372.70.
Ajay Bodke, CEO & Chief Portfolio Manager PMS, Prabhudas Lilladher, said: "During the morning trading session these stocks had lost up to 4.2 per cent. What would provide reassurance to the market is the fact that Ratan Tata is back in saddle as the interim Chairman as also the tight deadline of four months given to the selection committee by the Board of Tata Sons. After the initial wobble the group's shares should stabilize in my view."
In a sudden and dramatic turn of events, Cyrus Mistry was on Monday sacked as Chairman of India's largest conglomerate Tata Group and replaced by his predecessor Ratan Tata in the interim, a development that can trigger a confrontation between the single-largest shareholder and the company's founding family. Mistry's family firm Shapoorji Pallonji Group has 18.4 per cent in Tata Sons.
In the surprise development, the board of Tata Sons, where 66 per cent shares are held by philanthropic trusts endowed by members of the Tata family, ousted Chairman Mistry, saying it was acting for the long-term interest of the firm. The board named a five-member search committee, which includes Tata, to choose a successor within four months.
Tata Group currently commands a listed market capitalisation of over $125 billion (close to Rs 8.5 lakh crore), with the software giant TCS alone commanding a market value of Rs 4,72,636.70 crore. Coming to the stock market, the BSE benchmark Sensex too fell by 87.66 points to end at 28,091.42. The market languished in a negative zone due to unfavorable winds from earnings and ambiguity over Tata Group issue, said Vinod Nair, Head of Research, Geojit BNP Paribas Financial Services Ltd.