In your interest.
Online Personal Finance Magazine
No beating about the bush.
Despite terrible financials, the stock price of Birdhi Chand Pannalal Agencies appreciated by more than 3451%, or 36 times in 9 months
Birdhi Chand Pannalal Agencies Limited (BCPAL) was earlier in the textiles business. In May 2015, the management decided to change the name of the company to BPCL International Ltd. Earlier, BCPAL had also announced plans to diversify into financial services and take over control of a non-banking finance company. Further, it plans to apply for a dealership of Steel Authority of India’s products. All this is rubbish. Over the past four quarters, BCPAL reported total revenue of just Rs40 lakh and a loss of Rs11 lakh. Yet, over the past nine months, the stock price appreciated by more than 3451%, or 36 times, to Rs559.25 on 11 June 2015, from Rs15.75 on 8 September 2014. In other words, if you had invested Rs10,000, in just nine months, you would be richer by over Rs3.55 lakh. Just one to four stocks were traded in each trading session over the past year, except in a few bulk deals. Each time, the stock hit the upper circuit. However, from 3 June 2015, the trend reversed direction, hitting the lower circuit in each session. Another pump & dump operation? The regulator doesn’t seem to care. The company has some 1,200-odd shareholders. Who are they?
A perfect example of a pump and dump stock, Dalal Street Investments rose by 11600% and soon declined 97%
Listed on the BSE in 2001, Dalal Street Investments (DSI) ostensibly deals in shares and securities. Over the past four quarters ended March 2015, DSI reported total revenue of just Rs19 lakh and a net loss of Rs36 lakh. With a market-cap of Rs9 crore as on 28 May 2015, over the past nine years, the stock price movement of DSI has been amazing. It rallied smoothly and unimpeded from around Rs100 in March 2006 to a peak of Rs11,700 in June 2011, a rise of 11,600%. The smooth rally was a result of the stock being locked in its upper circuit of 2%, on each day that it was traded, day after day! Even the global financial crisis did not create any volatility in the stock. After hitting this peak, it started trending downward. This time, again, the downtrend was predictable, constantly hitting the lower circuit. From June 2011 to 26 May 2015, the stock declined by as much as 97%, from Rs11,700 to Rs306. On an average, there were just four or five trades each time the stock was traded since March 2006. In June 2013, DSI was debarred from trading in securities by SEBI for not complying with the minimum public shareholding requirement.
The stock rallied by as much as 756% and, from that level, stock fell 58%. A perfect example of a pump & dump