Stories of price manipulation
Karma Industries (Rs44)
From Rs23.10 on 30 April 2010, the share price of Karma Industries zoomed 643% to Rs171.60 on 4 April 2011. Moneylife wrote about this case of blatant rigging in its 5 May 2011 issue. SEBI and BSE continued to sleep and the stock was rigged up all the way another 86%. In the next two months. It made an intra-day high of Rs319.30 on 4 July 2011, a stunning rise of 1,282%. With tax-free, long-term capital gains in the bag, the speculators started unloading the stock and the price came crashing by 85% to Rs49 in just three months. But who cares?
Shree Nath Commercial & Finance (Rs10)
Shree Nath Commercial & Finance Ltd is in the 28th year of operations. It is planning to set up a solar power project. Its income in the year ended March 2011 was Rs29 crore and its profit after tax was negligible. From a low of Rs1.84 on 1 February 2010, the share price of this company zoomed 1,698% to Rs33 on 16 November 2010. Just a few weeks later, we highlighted the intense rigging in our 16 December 2010 issue. The price jumped further still and hit a 52-week intra-day high on the BSE—Rs41.80 on 25 January 2011, a rise of 2,178% from the low of February 2010. Then started the crash. By November 2011, the price was down to Rs8.42, a fall of 80%. After writing about a more than a hundred cases of blatant price-rigging, we no longer expect SEBI and BSE to act. Maybe the income-tax department should look at these cases. The pump-and-dump operations allow speculators, and the often the management, to book tax-free capital gains. These are not simple cases of price-rigging. There’s a full-fledged money laundering operation going on.
Inside story of the National Stock Exchange’s amazing success, leading to hubris, regulatory capture and algo scam
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