Stock manipulation: Atlas Jewellery India

After a sharp rise of more than 1970%, the stock price of Atlas Jewellery crashed by over 50%. Sebi is sleeping as usual

 

Atlas Jewellery India (Atlas) took over Gee El Woollens on 31 July 2013. After the current promoters acquired the controlling interest, the company’s name was changed. The present promoters, having an established jewellery business, started buying into Gee El Woollens since 2006. Was the takeover fair? Between 2006 and 2011, the company did not make any disclosure in compliance of the takeover regulations. The market regulator fined Atlas only Rs3 lakh for not complying with the regulations. Atlas effectively started its export business operations in January 2014. From February 2013 to October 2014, the stock price of Atlas shot up by around 350%, to Rs45 from around Rs10. This was not all. In a span of two months, the price shot up another 360% and peaked to Rs207 on 8 December 2014, from Rs45 on 1 October 2014, constantly hitting the upper circuit. The trend reversed soon. Just after hitting the peak, the stock price started falling sharply, constantly being locked in the lower circuit. The price crashed by 52%, to Rs100 on 18 February 2015. The exchanges and the regulator cannot see a clear case of market manipulation.
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    COMMENTS

    Salvadesswaran Srinivasan

    5 years ago

    Moneylife seems to be the only magazine investigating such wholescale rigging in the stock market. Everyone else seems too busy hawking financial products to do investigative journalism.

    Stock Manipulation: Noble Explochem

    Despite no business activity since 2006, in just over a year, the price of Nobel Explochem shot up by 1235%

     

    Established in 1982, Noble Explochem (Noble) was a leading manufacturer of nitro-glycerine-based explosives. In April 2004, the government prohibited the possession, sale and use of nitro-glycerine-based explosives, leading Noble to discontinue its manufacturing activities. The company, then, ventured into new business activities but was unable to make profits. The promoters offloaded their stake in the following years reducing it to around 15% from 65%. In November 2006, Noble stopped all business due to financial crisis and labour unrest. The defunct company has incurred losses in the past 10 financial years and the total net worth is eroded. In July 2011, the Board for Industrial and Financial Reconstruction (BIFR) declared Noble as a sick industrial unit. Despite nil revenues, the stock has attracted trading interest. Astonishingly, in just over a year, the price shot up by 1235%, to Rs6.81 on 15 September 2014 from Rs0.51 on 23 August 2013. Since then, the price has dropped by 32% to Rs4.66 on 3 February 2015; yet, it is up 814% from its low in August 2013. But the regulators don’t find this suspect.

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    Stock manipulation: Midas Infra Trade
    Midas Infra Trade gained a stupendous 1104% in 18 months, with almost no income
     

    Midas Infra Trade Ltd (MITL) is supposedly in the business of ‘share trading’. Prior to April 2014, MITL was known as Associated Finlease Ltd. It is a dormant company. It reports marginal income from its trading activities. With almost nil net profits, in an 18-month period, the stock of MITL gained a stupendous 1104%—from Rs0.95 on 23 May 2013 to Rs11.44 on 5 November 2014. Since then, the stock price has fallen 46% to Rs6.15 on 23 January 2015. Over this period, the promoters have been reducing their stake. In just a year, they have reduced their stake to 0.35% on September 2014 from 8.85% in September 2013. This suspicious activity did not raise a red flag, despite the regulator and the Exchanges being aware of MITL’s mismanagement in the past. In 2000, MITL’s certificate of registration as a non-banking finance company was rejected by the Reserve Bank of India (RBI) and it was prohibited from accepting deposits. Yet, in 2010, MITL collected money from public through money circulation schemes by making tall promises of high returns. Though this led to a cautionary notice from RBI, no penal action was taken against the company. MITL has also been suspended in the past for not complying with the listing agreement. No wonder, investors are so suspicious of the stock market and have little respect for the regulators.
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