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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.