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Thursday, July 7, 2011

Fabulous listing gains on fundamentally weak stocks

Today Rushil Décor Limited and Birla Pacific Medspa Limited got listed on the bourses and gave fabulous listing gains of 65% and 153% respectively.
Rushil Décor Limited share was issued at  ì  72 , on NSE it opened at ì  74.5, touched the high of ì 124.05 and at the end of the day it closed at ì  119.
Birla Pacific Medspa Limited is listed on BSE only. I shall again repeat that stocks which are listed on only one national exchange are more prone to price manipulation.
Is not it mind- boggling ? Especially, when both stocks are fundamentally weak . Fundamentals of Rushil Décor Limited are not attractive while Birla Pacific Medspa Limited is a loss making company; despite this, these  shares  gave fantastic listing gains.
How this happened?

We shall first look into trades of Rushil Décor Limited .
Many brokerage houses did the scalping in this stock by bulk deals to prop the share price. Scalping means settling (in this case, selling)the trade with the aim of securing small profit.
Brokerage houses involved in Scalping affirms that stock is fundamentally weak  and they fear that share price shall fall in future.
Bulk scalping by brokerage houses to prop the price
In the above picture it is clear, how scores of brokerage houses did the scalping to artificially prop the share price.
There was turnover of ì  4.6 billion on the NSE while the M-cap of the Rushil Décor Limited  stock is only ì  172 crore.
Around 5 crore shares of Rushil Décor Limited share changed hands today and only 5 % of these trades were delivery settled.
Now we shall delve into Birla Pacific Medspa  Limited.
Same modus- operendi was used in this stock also.
Bulk scalping by brokerage houses to prop the price
In past we have seen Timbor Home giving fantastic listing gains which vanished after few days.
Those investors who remained invested In Timbor Home have got their investment eroded by 28%.
When operators exit,stock falls like nothing
I, again and again advise my readers to stay away from stocks which lack fundamentals but give decent listing gains due to price manipulation by operators.


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