If stocks with almost 0% management holdings are on upward freeze of 5% every day for almost a month, what better can it get!! yep the stock markets are in a state of fury yet again, not because the BSE main index is moving northwards but the last 1000 or even more stocks in capitalisation are moving too!!!
What's wrong with such a "state"?
Rest assured if a stock by the name Sunitee Chemicals and which I never take pride in having held, rises by over 50% in a few days....its not good time to be in markets. This only means someone is operating in those stocks and the retail investor whose claim to fame is to enter markets at peak and to be stuck in such stocks is the one who is buying. But I always fail to understand one thing, why doesnt SEBI disallow such companies to trade if there is no business happening!
When does it happen?
Such a phenomenon is witnessed when its pretty easy to fool people, which is times of high liquidity intense activity in broader market that no one notices something is fishy down below.
Why does it happen?
Greed what else!!....the retail investor mostly those with limited capital, and those who think they are the king. I knew many of these people at Delhi who used to operate sitting tight in their small shops at dariyaganj (old delhi).."haan silverline utha lo, wisec global utha lo" you may tell them hazaar things about P/Es etc etc...but they would say stocks like silverline are cheap because they trade at Re.1/2 etc etc. A small investor, sometimes a new investor buys this logic and gets stuck the moment trend reverses. I have heard of targets like Re. 2 will become Re 100.
This is a crucial juncture for markets....results are around the corner. Mostly they will be good. Liquidity seems abundant (read blinding), and two months down the line we have the union budget. But we also have the ghost of subprime bothering us. And yet the smallest caps are buzzing!!! I have seen the worst crash of Oct '05 in penny stocks, also lived through May'06 and other crashes and became saner (read wiser).
Refer the earlier blog "Momentum Phenomenon" Sanghvi Movers is now 1X, and Jindal Saw is 1.5X in profit. GE Shipping continues its march.....so whats wrong with such stocks having good fundamentals......
Lets see when the reversal in penny stocks happens...till then happy investing....
Views: You could probably look at Elecon Engineering, Max India, Bartronics for 2008 and ahead
Disclaimer: These are my personal views.
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