After the crackdown on small companies initial public offerings (IPOs) by the market regulator, Securities and Exchange Board of India (Sebi), operators have shifted their focus to listed stocks of little known companies, say experts. Following this, Sebi is closely monitoring select stocks.
Ashapura Minechem, One Life Capital Advisors Ltd, Glodyne Technoserve, High Energy Batteries, Kemrock Industries and Exports and Tulip Telecom are among a few under Sebi’s watch.
Despite erratic price movements, these scrips were not put under survelliance or included in the trade-to-trade (T-T) segment by stock exchanges, which has left the field open for operators, say experts. Under the T-T category, punting is discouraged as delivery is compulsory. This makes rigging difficult and all buy and sell orders are monitored. Often, scrips are put in this group when unusual price movements are witnessed.
According to investment advisor S P Tulsian, many of these stocks are not worth even their par value and it is shocking that exchanges have turned a blind eye to such sharp price movements in these stocks.
“Exchange officials in the survelliance and risk management departments are lethargic. If you analyse complete asset and liability of some of these companies they are not worth at par. Their financial performance has been abysmal and in contrast to share prices. So, exchange officials are to be blamed if retail investors are losing money," he said.
For instance, the share price of Ashapura Minechem has managed to gain nearly 80 per cent in less than a month and rose three-fold in a year. The stock today touched a 52-week high of Rs 31.2 on the Bombay Stock Exchange (BSE) against a low of Rs 8.31 a year ago.
Similarly, the share price of Onelife Capital Advisors Ltd. (OCAL) is up from Rs 114 a year ago to Rs 616. Sebi had barred the promoters of OCAL from participating in the market for diverting IPO funds for unspecified purposes. In a month, the share price of OCAL is up 27 per cent from a low of Rs 482. Another stock, High Energy Batteries has doubled in three weeks and touched a high of Rs 183 from a low of Rs 87.
The share price of Kemrock Industries crashed from Rs 465 to Rs 158 in less than a month. Glodyne Technoserve has been on a crash course after rumours of an Intelligence Bureau report did the rounds of the market last month. The stock is down 78 per cent from a high of Rs 434 in May and was traded at Rs 91 today on BSE. Tulip Telecom too has seen sharp price movements. Its monthly high was Rs 120 and low Rs 65 on BSE. Today the stock was traded at Rs 100.
Despite such sharp price movements, which experts say clearly indicate high operator activity, these stocks remain in the 'B' group and were not included in the T-T segment. A Sebi official said, there was further scope to refine the criteria for putting stocks under the T-T category and they would study as to why these stocks were not yet put under survellience.
The T-T category was introduced shortly after the 2001 Ketan Parekh scam. But the detailed guidelines of how, when and why a scrip would be put under surveillance were not disclosed to the market. Exchanges took this decision mainly in consultation with Sebi. Last year, both BSE and the National Stock Exchange published broad criteria for shifting stocks to the T-T category.
Operators try to influence the timing of scrips entering the T-T category. Currently, BSE has 655 stocks and NSE 122 stocks under surveillance. Market players say giving out more precise details of stocks being put under surveillance can result in transparency.
Currently, nobody has the right to know or question why a particular stock is being put under surveillance or taken out of the category.