An insider account of a life insurance company’s sales tactics
Working as a sales manager in a...
The stock price of Shree Ashtavinayak Cine Vision has been sharply up and down on rumours, giving away a hint of manipulation
After dropping consistently for nearly two months, the stock of Shree Ashtavinayak Cine Vision has started to move up again, as suddenly as it had begun to drop a couple of months ago. Like in November when it began to fall from Rs45 levels, there is no apparent reason now for it to start climbing up. And this has been the record of the share price of this film production company over the past year.
In fact, trading has been locked in the circuit daily-in the lower circuit on the way down, and the upper circuit on the up move.
On 14th January 2011, the stock price touched a 52-week low of Rs 4.86 during trading, but closed a notch higher at Rs5.36. This was the first upward move since 25 November 2010. And in the six trading sessions since 14th January, the stock has gained 33% to Rs7.15. This is in sharp contrast to the 90% fall in two months till 14 January 2011.
Even trading volumes have changed significantly. On 19 January 2011 the volume of shares traded on the stock exchange was 114,068,280 shares, up from merely 364,547 shares a day earlier. In fact, the average volume traded for the six trading sessions since 14th January is up to over 428 lakh shares compared to the average in the two months before 14th January which was about 14 lakh.
The question therefore is, what's driving the stock price? Or, is it a case of price manipulation?
Shree Ashtaviyanak has produced such successful films like Jab We Met, Golmaal Fun Unlimited, Golmaal Returns, Pyar Kyon Kiya and Bhagambhag. Early September, it released Dabaang, which turned out to be a hit. It set a record by grossing around Rs80 crore in the first week alone, which made it the highest grossing Bollywood film in 2010. It also did remarkable business overseas.
Interestingly, during this period, the company's stock price gained continuously, from Rs18 levels about a month before the release of the film to over Rs50 in November. It seems that this might be the case again now, with another new film scheduled for launch in February. Other than this, there is no apparent reason for the stock price gain. There is also nothing to explain the 90% drop in the two months till 14 January 2011.
Market experts suggest that the Shree Ashtavinayak Cine Vision stock is a favourite of traders. "It is a favourite stock of the traders, mainly in intra-day trading," said an analyst from a leading brokerage firm who requested anonymity.
Other market watchers describe it as an 'operator-driven' stock. Which means that a bunch of big players together with people close to the promoters effortlessly rig the prices as they please, without fear of the regulators.
In February last year, the stock price slipped from Rs33 levels and was locked in the lower circuit for days, till it settled at Rs11 on 11th March. It languished at Rs11-15 levels between March and July last year, then started to move upwards, apparently on rumours that the company would earn a bumper profit from the distribution of 3 Idiots.
Feeding on the anticipation around Dabaang and its success subsequently, the price moved up further through September and October to Rs50 levels. (Read 'Herd on the Street', ). Around this time there were also some rumours that Anil Ambani was interested in picking up a stake in the company. But it has fallen sharply since.
So, it may be wrong to conclude that the fresh upward move this time is also due to the anticipation around the release of the new film Run Bhola Run which is scheduled for screening next month. (Read 'Hit movies, flop stock', )
Those investors who picked up the stock on the upward move last time, may be rueing their decision. So, those who might think there is an opportunity this time again, had better be careful.
India imported more cases of bulk wine than labelled wine from Australia in 2010. But why are importers tight-lipped?
According to a recent article in an Australian trade publication, Wine Australia, India imported around 66,000 cases of bulk wine from Down Under last year, almost thrice the estimated amount of bottled-in-origin (BIO) wines (which have the original labels from the exporting country) imported in 2010.
On the basis of the above article, Mr Subhash Arora, president of the Indian Wine Academy, has stated in his website that "the past several years have been continuously indicative" that has been a greater import of "bulk wine than bottled wine."
Mr Arora says in his website: "Import of bulk wine is a good way of saving costs of winemaking and Australia offers a wide choice."
But no producer in India is willing to admit that there has been such a huge quantum of bulk wine imports, writes Mr Arora.
So if wine producers are not importing these massive bulk quantities, then who is?
There lies the rub. In India, bulk wine can be imported on the payment of 150% customs duty of the Cost, Insurance & Freight (CIF) value, which is also same for BIO wine.
But the pricing of alcohol is a State subject. Maharashtra has exempted excise duty for wines produced in the state, but levies an exorbitant 150% special excise duty on domestic wine imported from neighbouring states like Karnataka.
What this means is that importers of wine based in Maharashtra can affix their own label on such bulk imports, and sell them at a much higher price-because their sale price will be much higher, but their cost price would remain the same.
"Wine producers are denying that they are importing wine, so that they get excise duty benefits," Subhash Arora, president of the Indian Wine Academy, told Moneylife.
Mr Arora states in his article that import of bulk wine is a good way of saving costs of winemaking and Australia offers a wide choice. China, as it has been doing in the recent past, is also flexing its financial muscle here and has been quick to tap the Australian market for its bulk wine imports.
On 17th January, Rajeev Samant (founder and CEO of Sula Vineyards, one of Maharashtra's and the country's leading wine producers), commented on the above article posted on the Indian Wine Academy website: "So where do you think that bulk is going, Subhash? Do share your unparalleled knowledge with us!"
When Moneylife pointed out that Mr Samant had commented on the Indian Wine Academy's website, Mr Arora was quick to point out that Sula was not part of this game.
But the question remains, who has been taking advantage of Maharashtra's liberal excise duty regime?