Stock Mix-up: Huge Surge in LG Balakrishnan Shares After Investors Confuse it with LG Electronics

The stock market on Tuesday witnessed a funny twist after investors rushing to purchase shares in LG Electronics India, got confused and ended up surging the shares of a similarly named company - LG Balakrishnan and Bros.

Founded in 1937, LG Balakrishnan and Bros is a Coimbatore-based auto component maker. The firm saw a surprise show at the trade market on Tuesday morning, all because of ‘mistaken identity’ and rush.

According to brokers, some investors who were 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, an Economic Times report stated.

Additionally, the stock zoomed to a high of ₹1,600 on NSE in early trades on Tuesday, which was nearly 15% above its previous day's closing price of ₹1,390. However, after investors realised their mistake and withdrew their investments, the firm gave up the profits and ended 1.6% lower at ₹1,367.60.

Such instances of trade mix-ups are not very uncommon in the stock market and they mostly happen due to mistaken identities. Brokers said such cases have 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 and eventually ended up buying DVRs by mistake.

As a result of that mix-up, the DVR shares saw outsized intra-day spikes in volume and price, often reversing later in the day after traders realised their mistake.

One of the most striking glaring global examples of mistaken identity in the stock markets occurred during the early months of the Covid pandemic. Investors confused Zoom Technologies, a defunct Chinese mobile firm, with Zoom Video Communications, the popular video conferencing platform. As retail investors rushed to buy shares after the surge in videoconferencing demand, many mistakenly bought shares of Zoom Tech instead of Zoom Video.

Such frenzied purchases sent the wrong stock soaring nearly 1,800% in few weeks thereby forcing US regulators to step in and temporarily suspend trading in Zoom Technologies.