carao
22-11-2007, 06:50 AM
A chart showing the share prices of MMTC, over the past year, could well be a chart chronicling the speculative momentum that seems to have gripped a section of the Indian market in recent months.
Shares of the government-owned commodities company were quoting at around Rs 2,000 for the greater part of the past two years but suddenly started a one way upward march only to lose steam at around Rs 57,000 levels. But the party seems to be over for since then, share prices have been on a downward spiral, ending at around Rs 38,000 on Wednesday. The trend is similar in other momentum counters like Jai, IFCI, STC and Nagarjuna Fertilisers, all of which appear to have peaked out temporarily.
So have these momentum stocks run out of steam? Or has the nervousness in the global markets unnerved our local speculators too? Anurag Tripathi of Almondz Capital agrees that there has been a cooling of share prices in most of these counters. But he warns that we need to recognise that there are some companies that actually are promising and others with no intrinsic value. “We need to appreciate that difference while looking at such shares,” he says. As for hot stocks, Mr Tripathi warns that players usually shift counters across the year thereby fuelling unexplained rallies in the future.
Since August this year, when the sensex started rising from the 16k level, shares of many companies with low public float (less number of shares with non-promoters) witnessed unexplained price rises. When there are few shares with the investing public, even a small buy order could see the stock hit circuit(exchanges stop further trades if shares cross a daily limit).
For instance Jai Corp, a company that has been listed on the Indian bourse for many a decade, started hitting the circuit daily, thereby crossing the Rs 15,000-mark from its levels of Rs 3,000 in July this year. Since then the promoters have announced a split in the stock resulting in the counter losing steam. IFCI too has fallen (to Rs 87 on Wednesday) after crossing Rs 100 levels a month back. Punters had in the past opined that MMTC would go up to Rs 70,000 in a few days, but this dream remained just that — a dream.
Vikas Khemani of Edelweiss Capital says that the trend is a natural consequence of share prices falling across the board. “Speculative activity in certain stocks should not take our attention away from the basic India story,” he says. Mr Tripathi says that as smart money (sophisticated investors) has stayed away from the market in the past couple of months, many retail investors have been active in these hot counters. He advises caution as there is a good chance that one loses half of his or her investment in such stocks.
ET
Shares of the government-owned commodities company were quoting at around Rs 2,000 for the greater part of the past two years but suddenly started a one way upward march only to lose steam at around Rs 57,000 levels. But the party seems to be over for since then, share prices have been on a downward spiral, ending at around Rs 38,000 on Wednesday. The trend is similar in other momentum counters like Jai, IFCI, STC and Nagarjuna Fertilisers, all of which appear to have peaked out temporarily.
So have these momentum stocks run out of steam? Or has the nervousness in the global markets unnerved our local speculators too? Anurag Tripathi of Almondz Capital agrees that there has been a cooling of share prices in most of these counters. But he warns that we need to recognise that there are some companies that actually are promising and others with no intrinsic value. “We need to appreciate that difference while looking at such shares,” he says. As for hot stocks, Mr Tripathi warns that players usually shift counters across the year thereby fuelling unexplained rallies in the future.
Since August this year, when the sensex started rising from the 16k level, shares of many companies with low public float (less number of shares with non-promoters) witnessed unexplained price rises. When there are few shares with the investing public, even a small buy order could see the stock hit circuit(exchanges stop further trades if shares cross a daily limit).
For instance Jai Corp, a company that has been listed on the Indian bourse for many a decade, started hitting the circuit daily, thereby crossing the Rs 15,000-mark from its levels of Rs 3,000 in July this year. Since then the promoters have announced a split in the stock resulting in the counter losing steam. IFCI too has fallen (to Rs 87 on Wednesday) after crossing Rs 100 levels a month back. Punters had in the past opined that MMTC would go up to Rs 70,000 in a few days, but this dream remained just that — a dream.
Vikas Khemani of Edelweiss Capital says that the trend is a natural consequence of share prices falling across the board. “Speculative activity in certain stocks should not take our attention away from the basic India story,” he says. Mr Tripathi says that as smart money (sophisticated investors) has stayed away from the market in the past couple of months, many retail investors have been active in these hot counters. He advises caution as there is a good chance that one loses half of his or her investment in such stocks.
ET