Dealers told Reuters that the crash was on widespread speculation that some investors are liquidating their positions because of margin call pressures. Most of these firms are also highly leveraged with significantly high proportion of pledged shares.
Also read: Why pledged shares, margin calls hurt
Promoters pledge their shares as collateral to raise working capital or short term loans, to increase their holding or to fund an acquisition.
According to market regulator Securities and Exchange Board of India, promoters have to disclose details of pledged shares if the same exceeds 25,000 shares in a quarter or 1 per cent of the total shareholding or voting rights of the company, whichever is lower.
Glodyne Technoserve is an infrastructure management service (IMS) company that mainly operates in India and North America. The promoters of Glodyne Techno have pledged 84 per cent of their shares.
Pipavav Defence and Offshore Engineering builds warships and other vessels for the Indian Navy. Headquartered in Mumbai, its yard in Pipavav, Gujarat, is one of the largest in India. Over 97 per cent of promoter shares are pledged.
Parsvnath Developers is a Delhi-based realty firm. Promoters have pledged over 87 per cent of their shares.
Other stocks to see massive selling today were Radico Khaitan, Nitin Fire protection, Everonn Education, and Tulip Telecom.
Shares in Radico Khaitan, which manufactures branded liquors, slumped over 13 per cent. 43.5 per cent of Radico shares are pledged.
Leading educational firm Everonn was down 12 per cent. Everonn is saddled with over 31 per cent in pledged shares.
Telecommunications services provider Tulip Telecom shares were down over 6 per cent. 46 per cent of promoter shares in the company are pledged.
(With inputs from Reuters)