Cyrus Mistry's Exit May Trigger Major Correction in Tata Stocks: Experts

The abrupt and unprecedented ouster of Cyrus P Mistry as the chairman of Tata Sons is likely to impact the stocks of Tata Group companies, according to market experts. They say that the removal will lead to an uncertainty and investors may look to exit which will trigger a correction in Tata Group companies’ stocks.

Here’s what market experts had to say about Mistry’s removal.

Dipan Mehta, Member, BSE & NSE

"I think it is a total bolt from the blue and completely unexpected and that certainly brings about an element of uncertainty in the Tata Group per se. Cyrus Mistry's direction was very well received by the street. His exceptional focus on profit, return on equity and divesting the businesses which were not performing with a lot of great of aggression was what had made the group do exceedingly well in the market. We do hope that whoever his successor is does carry out the vision that Cyrus Mistry has laid out for the group."

"Maybe the group should explain the reason for such a resignation. I think investors in the market certainly looking for specific reasons that would give insight into the functioning of the Tata Group for which we have very high regards as far as corporate governance standards are concerned."

Ambareesh Baliga, Market Expert

"This was least expected from someone like a Tata Group and clearly the market doesn't like instability in the senior management and that too this is the topmost management. So, I think this uncertainty is going to continue at least for the next 3-4 months or maybe more till they really find successor. Till then the market may take it negatively and we could possibly see most of stocks correcting to a very large extent."

Prakash Diwan, Altamount Capital

"The uncertainty that this event would cause is going to put few companies in more distress than the others. So, if you look at Tata Steel, if you look at Tata Global Beverages these are companies which are in the throes of restructuring of such."

" Tata Steel , we all of us know, has been struggling with the kind of solutions that it needs in Europe and if the top management were to be taken away and a new incumbents come in with the next 4-5 months everything goes in a limbo. I don't think people are going to be willing to wait for a phase of uncertainty, so you will see a little bit of flutter in the stocks Tata Global Beverages , Tata Motors and possibly, Tata Steel and Tata Chemicals as well. What could probably get saved is probably TCS , because that is a professionally run business, so really not much of an influence from the top management, but in short this is going to be definitely inhibiting for growth for these stocks were the counter is to do well and it will probably give them a time correction after a while till some new announcements come through."