How to identify an operator-driven stock

Last week, the Securities and Exchange Board of India (SEBI) pulled up promoters of four companies - Welspun Corp, Ackruti City, Murli Industries and Brushman India - for allegedly rigging their own stocks.

The promoters of these companies allegedly colluded with stock market operators, Sanjay Dangi and his associates and the Ashika Group, to manipulate their stock prices.

Following SEBI's orders, stock prices of these companies fell sharply.

Ackruti City, Welspun Corp and Murli Industries fell by 20, 27 and 20 per cent, respectively, the next day.

While many operator-driven stocks allow traders to make a quick buck, for retail investors who have invested in these stocks, things could be difficult.

It is not easy to identify a stock that is being manipulated vis-a-vis another which is rising due to sentiment.

Yet, an investor can look at signs that may point towards manipulation and stay away.

Text: Dipta Joshi, Tinesh Bhasin, Business Standard

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