Shares of paper stocks extended losing streak for the second straight session on Thursday, slipping up to 12 per cent in intraday trade on the Bombay Stock Exchange, amid reports that the government has dropped the plan to outlaw single-use plastic items.
According to a PTI report, the plan was shelved as it was "too disruptive for the industry at a time when it is coping with an economic slowdown and job losses". Earlier, there were expectations the government would announce a ban on single-use plastic on October 2, the 150th birth anniversary of Mahatma Gandhi. However, instead of a ban, Prime Minister Narendra Modi in his speech on October 2 set a deadline of 2022 for eradication of single-use plastic from India.
Reacting to the development, shares of paper-related stocks such as JK Paper, Star Paper Mills, Orient Paper & Industries, Ruchika Papers, Balkrishna Paper, SI Paper Mills, Malu Paper Mills, NR Agarwal Inds, Padumjee Paper and West Coast Paper tumbled up to 12 per cent today. Meanwhile, the BSE Sensex closed 0.52 per cent, or 198 points, lower at 38,106.
Shares of Ruchika Papers declined as much as 12.46 per cent to touch an intraday low of Rs 86, after opening lower at Rs 92.45 against previous close level of Rs 98.25. Trimming some of early losses, the scrip closed trade at Rs 87.90, down 10.53 per cent, on the BSE.
Star Paper Mills hit a lower circuit of 10 per cent to Rs 139.90, while Orient Paper & Industries fell 10 per cent to Rs 27.60. JK Paper slipped 10 per cent to Rs 126.15 and Seshasayee Paper & Boards too dropped 7.54 per cent close at Rs 186.30 on the BSE.
In the last two months, investors betted aggressively in paper stocks, which were going to benefit directly from the single-use plastic ban, after PM Modi in his Independence Day speech urged citizens to give up single-use plastic by October 2.
In September, shares of Star Paper Mills zoomed 84 per cent as compared to 3.6 per cent rise in S&P BSE Sensex. Ruchika Papers stock surged 47 per cent last month amid hopes of ban on single-use plastic. Among others, JK Paper, Orient Paper, SI Paper, Emami Paper, and NR Agarwal Inds had rallied between 30 to 50 per cent.
Edited by Chitranjan Kumar