* Indian midcaps slump on pledged share concerns
* Pledged shares reach $27.7 bln-MStanley report
* Midcap shares have been hit hard this year
(Adds analyst quote, details, background)
MUMBAI, Feb 25 (Reuters) - Indian mid- and small-sized
stocks slumped on Monday, with Welspun Corp falling as much as
28 percent and Core Education losing as much as 64.5 percent, on
speculation that the pledged shares of these companies were
being sold off, dealers said.
Controlling stakeholders of Indian companies often receive
loans from financial institutions, pledging their shares as
collateral, making these stocks vulnerable to any rumours of
The total value of pledged stocks in India reached 1.5
trillion rupees ($27.68 billion) as of the end of December,
according to a Morgan Stanley report last week, marking a 5
percent increase from the July-September quarter.
"It looks like a bear attack on stocks which are highly
pledged," said Kishor Ostwal, Chairman at CNI Research, a
research and advisory firm in Mumbai.
Welded steel pipe maker Welspun Corp Ltd was down
21 percent as of 0835 GMT, compared with a 0.3 percent gain in
the broader NSE index.
Shipbuilder ABG Shipyard Ltd and Aanjaneya
Lifecare Ltd fell by their daily limit of 20 percent,
while Core Education & Technologies Ltd was down 61
Officials at Aanjaneya Life and Core Education were not
immediately available for comment. Welspun was not immediately
reachable. ABG Shipyard said it would issue a statement later in
ABG Shipyard chief financial officer and executive director
Dhananjay Datar told ET Now TV station the company did not know
the reason for the steep falls in its share prices, while saying
he was not aware of any selling in pledged shares by controlling
India's midcap shares have been under pressure this year,
due to concerns about their earnings as well as persistent
speculation of funding issues that are leading to the sell-off
of pledged shares.
Shares of Housing Development & Infrastructure Ltd
fell 31.2 percent in January on continued market speculation
over its debt repayments.
($1 = 54.2000 Indian rupees)
(Reporting by Abhishek Vishnoi and Manoj Dharra; Editing by
Rafael Nam and Sanjeev Miglani)