As investors rushed to buy LG early to cash in on the listing, some accidentally ended up buying shares of a namesake company: LG Balakrishnan and Bros, a Coimbatore-based auto parts maker founded in 1937.
Brokers said some investors, who were in a rush to execute ‘buy’ trades in LG Electronics, may have mistakenly executed the orders in LG Balakrishnan, a relatively thinly traded stock with a market value of ₹4,372 crore at the end of trading on Tuesday.
The total trading volume on BSE and NSE stood at 684,105 shares, compared to the fortnightly daily average of 31,400.
The stock rose to a high of ₹1,600 on NSE in early trade on Tuesday, nearly 15% above the previous day’s closing price of ₹1,390. The company gave up gains to end 1.6% lower at ₹1,367.60 as investors likely realized the mistake and closed out their positions.
Trading mixups caused by mistaken identity are not very uncommon in the stock market. Brokers said such cases were common in Tata Motors and Tata Motors’ Differential Voting Rights (DVR) shares, especially during news-packed days when retail investors rushed to buy Tata Motors shares but ended up buying DVRs by mistake. DVR stock saw excessive intra-day spikes in volume and price, which often reversed later in the day once traders realized the mistake. identity in the markets occurred during the early months of the Covid pandemic, when investors confused Zoom Technologies, a defunct Chinese mobile company, with Zoom Video Communications, the popular video conferencing platform. As retail investors rushed to take advantage of the surge in demand for video conferencing, many inadvertently bought shares of Zoom Tech instead of Zoom Video.
The frenzied buying sent the wrong stock soaring nearly 1,800% within weeks, forcing U.S. regulators to intervene and temporarily suspend trading in Zoom Technologies.
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