Exactly a week ago (May 3), shares of P C Jeweller slumped to a 52-week low of Rs 94.55, after reports that the CBI had raided the office of the company.
It all turned out to be factually incorrect. Once the rumors were quashed by the management, the same day the stock closed at Rs 123. The next day on Friday (May 4), the stock jumped again to close at Rs 173 and on Monday (May 5), the stock had surged to Rs 238, after the company decided on a buyback of shares.
But, the shares have also destroyed investor wealth, after having slipped from levels of Rs 500-600 in Jan 2018, to the current levels of Rs 214.
The company has seen massive fund based selling by Fidelity, which has reduced its stake in the company from levels of more than 9 per cent, to the current levels of 3 per cent.
When the shares came crashing down from levels of Rs 500, due to intense selling pressure, PC Jeweller had to frequently issue statements, that there was nothing materially wrong with the company and it was "business as usual".
The board of the company is slated to declare a buyback of shares today. If the buyback price is not high, there could be a reaction in the shares. The promoters of the company have made it abundantly clear that they do not wish to participate in the buyback of shares. This could instil some confidence in investors.
For investors, who have bought on rumors of raids have made good money in the stock. For others, who have bought at high prices, there is no choice but to adopt a wait and watch approach, especially for the buyback price to be decalred later today. The results are to be declared later this month and should also be closely watched.