Warren Buffett Quotes

Tuesday, June 25, 2013

SEBI = SMART ,PROMOTERS = OVER SMART


Our smart regulator SEBI introduced Periodic Call Auction to save retail investors from PRICE MANIPULATION AND LOW LIQUIDITY !!!!.But  some over smart promoters  find ways to escape from this system ,that itself without  selling  even  100 shares to general public in one quarter. Unbelievable ? , no,  it is possible.Read it below :

As per the circular issued by SEBI ,a stock will fall into PCA if it is satisfying all the below three conditions.

Based on this circular  if there is an average daily  trding volume of 10000 (Total shares traded in the given period / no of trading days.)   ,such stocks will be excluded from this system.

See the below picture to see the daily trading volume of WESTLIFE DEVELOPMENT LTD :













It is clear from the data that ,out of 56 trading days during this period ,every day except on 22/03/2013
just one or two shares traded.But on 22 nd,total traded volume was as high as 625001. The most interesting part is that even you  entered a buy order on that day at the very first second of trading hour on upper circuit ,you can't become a share holder of this company .The entire traded quantity on that day executed through the block deal window between few promoters itself . ( see the data below)


Block deal is a facility provided by exchanges In order to facilitate execution of large trades.A separate trading window is provided. A trade, with a minimum quantity of 5,00,000 shares or minimum value of Rs.5 crore executed through a single transaction on this separate window of the stock exchange will constitute a BLOCK Deal

It is clear that normally Block Deal window is out of reach of common investors.

WITH THIS SINGLE BLOCK DEAL WITHIN FAMILY MEMBERS ,COMPANY SUCCESSFULLY  SATISFIED THE CRITERIA ( MORE THAN 10000 SHARS PER DAY)  TO COME OUT OF PCA WITHOUT GIVING   100 SHARES TO GENERAL PUBLIC.

ON THE OTHER SIDE ,THERE IS LOT OF GOOD COMPANIES WITH DAILY VOLUME OF 2000 OR 5000 ARE CAUGHT IN PCA .

THIS SAME COMPANY DONE THE SAME GAME IN THIS ONGOING QUARTER WITH A BLOCK DEAL OF 630000 SHARES ON 19/06/2013 ,AND IT WILL ESCAPE THIS TIME TOO IF SEBI IS NOT CONSIDERING IT AS A SEPERATE CASE.


CONCLUSION

MESSAGE FROM SEBI TO PROMOTERS :-  IF YOU WANT TO EXIT FROM PCA , DO SOME FRAUD PRACTICES LIKE THIS ,IF YOU ARE GENUINE WE WILL PUNISH YOU .





18 comments :

  1. Sir, is it possible a script --- pca@ bse and non pca@nse ???

    ReplyDelete
  2. Thanks VP for the comprehensive study!! But who will wake up SEBI??

    ReplyDelete
  3. Dear Vp,
    Whatever i mentioned in my letter to SEBI chairman, you just pointed out here :)
    some highlights..
    Why PCAS rules are faulty?

    1) Suppose i own a Stock A which is having a face value of 10 rs with a share capital of 1 lakh then there will be 10 thousnd shares issued to investors and another company B is having one lakh share capital and face value of one rs is having one lakh issued shares, both companies are same in terms of capital, earning etc but due to PCAS rules stock A can get in to periodic call option due to lack of trading volume.



    2) Another sotck which is trading one share every day and once in a quarter some massive transactions happens like 9 lakh shares in a single trade, as per the PCA rule these stocks will not be included and other stocks that trades 1000 to 5000 stocks every day will get in to PCAS list. for ref: check this company trading patterns: Westlife in bse.

    3) free float is vary for company to company, good companies promoters holds more than 50% of shares, in this condition shares avilable for public trading will be very less compared to poromoters holding very less stocks in their company even if they have same share capital.

    4) good companies very reluctant to dilute their capital, but companies tries manipulate market they change captial often.

    5) trading in 2 different PAN account.

    If some one want to manipulate a stock in PCAS, those can trade with 2 different accounts, 2 computer with 2 different pan and 2 net connection, how matching trade based on PAN can save this situation?.

    ReplyDelete
  4. Thanks sir for educating me with the concept of block deal

    ReplyDelete
  5. dear vp,
    I have granule india 800 shares at 160Rs.Is it good to average.

    Regards

    S R Prabhakar

    ReplyDelete
  6. how clearly u have shown the fraud. hats off to you.

    ReplyDelete
  7. Sir
    Whats going on in our market nowadays....becuase when the SENSEX is down 100 points --100 to 180 points of small and midcaps are falling. If the SENSEX up 300 points and only 10-50 points of small and midcaps are raising.. seems purely operator driven market..

    Ur view please.

    Selvi

    ReplyDelete
  8. can we add acrysil?

    ReplyDelete
    Replies
    1. It is a good stock ,but one should consider the low liquidity risk due to the inclusion in PCA.

      Delete
  9. Wrote a mail to SEBI chairman on PCA; But I wonder if he will read it considering recent flood of mails to him on the PCA subject.
    Harsha

    ReplyDelete
  10. While accessing your page, I am getting a warning from anti virus not to open your page due to MALWARE Problems. Please check it out

    ReplyDelete
  11. Value Pick Ji

    Can we average Orient Bell at this rate
    Looking for your advice

    Thanks
    Arun KP

    ReplyDelete
    Replies
    1. I think downward risk is limited ,but one should average it with a long term view only.Since RBI not redued interest rate as expected earlier construction sector is showing muted trend .

      Delete
  12. Dear sir,

    Has Sebi posted its new list of PCA shares....

    ReplyDelete
  13. Very good and interesting analysis.

    ReplyDelete

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