As investors scrambled to buy LG early to ride the listing pop, some ended up mistakenly scooping up shares of a similarly named company: LG Balakrishnan and Bros, a Coimbatore-based auto component maker founded in 1937.
Brokers said some investors, in a hurry to execute ‘buy’ trades in LG Electronics, would have erroneously punched 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 traded volumes on BSE and NSE were 684,105 shares, compared with the two-week daily average of 31,400.
The stock zoomed to a high of ₹1,600 on NSE in early trades on Tuesday, nearly 15% above its previous day’s closing price of ₹1,390. It gave up the gains and ended 1.6% lower at ₹1,367.60, as investors probably realised the mistake and wound up their positions.
Trade mix-ups caused by mistaken identities are not very uncommon in the stock market. Brokers said such instances happened often in Tata Motors and Tata Motors’ Differential Voting Rights (DVR) shares, especially during news-heavy days when retail investors rushed to buy Tata Motors shares but ended up buying DVRs by mistake.The DVR shares saw outsized intra-day spikes in volume and price, often reversing later in the day once traders realised the error.One of the most striking global examples of mistaken identity in markets occurred during the early months of the Covid pandemic, when investors confused Zoom Technologies, a defunct Chinese mobile firm, with Zoom Video Communications, the popular video conferencing platform. As retail investors rushed to capitalise on the surge in videoconferencing demand, many inadvertently bought shares of Zoom Tech instead of Zoom Video.
The frenzied purchases sent the wrong stock soaring nearly 1,800% in a matter of weeks, forcing US regulators to step in and temporarily suspend trading in Zoom Technologies.
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