Zee scrip spiraling downwards

If anyone thought the Zee Telefilms scrip had finally bottomed out better think again. Down is where it has been plummeting since yesterday. And there seems to be no end to it all. On the day of Zee's AGM, the share price was hovering between the range of Rs 90 and RS 92. But it seems that the AGM could only dampen the market sentiment, rather than supporting the price.

The reasons attributed to the fall in price are many. The first is pessimistic picture painted by chairman Shubhash Chandra during the AGM. He warned investors that the overall negative market scenario prevailing was going to impact on financials as companies cut back on advertising. The search for a strategic investor for Zee Telefilms being put on hold only added to the sentiment.

'Zee has always gone up or down on the 'news' and not on fundamentals,' says an analyst with a foreign equity research firm. Short trading takes place in the script based on the same news, so players normally take positions for short periods of time and immediately exit when there are small fluctuation in the price. The price is simply not allowed to settle down.

The market also seems to be very concerned about the huge outstanding the company has. Even though Chandra has categorically made clear that there will not be any further financial transactions between any Essel Group company and Zee Telefilms, the market does not believe that, opined one analyst. 'Zee has always made such commitments which were later not kept. There are various items which are waived off in the financial statements at the end of the year. And this is possible in this case also.' The market is concerned about the amount (close to RS 900 million) that is still to be paid by Essel Group to Zee and the close to RS 1 billion to be received from Buddha Films.

The recent relaunch exercise hasn't fetched much results. Apart from Baazi Kiski and Nilaam Ghar, which are game shows, other soaps are not doing that well. "It's been almost a month and half, and the shows are not yet picking up. Dailies should not take that long to show the results." As far as the new programmes go, most analysts were of the opinion that a few shows like Choti Maa, Sarhadein and Koi Apna Saa were really good and should be developed.

As for the movement of the scrip on the bourses today, it (up 4.94% to RS 74.30) bounced back on renewed buying interest after Monday's fall. The stock shed 10% on Monday amid fears of a slowdown in earnings, and a possible delay in the induction of a strategic partner by the company.

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