IT raid on listed company! Shyam Sekhar says investors are only praying by waiting for the air to clear

Market veteran Shyam Sekhar in a X post said a raid on a listed company is a very strong call to action, as  raids rarely happen without any proper reason. The founder of ithought Financial Consulting, an investment advisory firm, said when such a development unfolds, the problem is no more with the company but with investors.

He asked whether everything reverses back to normal, will waiting help investors to overcome the negativity, and can they simply stay put and come out unscathed. He said by standing on a sinking ship, investors wish a miracle to happen.

"By waiting for the air to clear, we are only praying," he said, adding that investors are unwilling to face upto reality.

"This happens all the time. It is upto us to change," he said.

Sekhar did not take any name in his post.

In another unrelated post, he said if a company commits a grave wrong in governance, a reflexive tendency is to mock investors who are invested in it, which he says is just victim shaming.

"Investors play no part in such wrongdoings. The fact that they believed in a business and management is simply an occupational hazard they cannot live without. Investors have no alternative. If their luck is bad, the music will stop when they are holding the hat. It could happen to anyone, in any company," he said.

Polycab India raids

The Ministry of Finance had in a January 10 statement, without naming any company, said the income tax department had credible evidences that a company engaged in "cables and wires" made unaccounted cash sales of around Rs 1,000 crore.

Following this, shares of Polycab India nosedived 20.50 per cent to settle at Rs 3,904.70 on NSE on January 11, as it is believed that the company mentioned in the ministry release is Polycab India Ltd, which has been the market leader in the cables and wires market. The same company had informed stock exchanges about the income tax searches in December.

Polycab India said it has not received any communication from the IT department but amid uncertainty, Axis Capital cut its share price target for Polycab India Ltd sharply to Rs 4,300 from Rs 5,809 earlier. Geojit Financial Services, on the other hand,  expected the stock to underperform and said its 'Sell' target on the stock has been achieved.

Also read: Stock recommendations by analyst for January 12, 2024: RVNL, Exide Industries and LT Foods

Also read: JSW Steel shares clocked flat returns in six months; can they cross Rs 1,000 mark?