Harshad Gems Lose Some Sparkle

Gravitational forces seem to be catching up with stocks that looked stronger than pivotals during the pre-budget rally. Stocks like Sterlite Industries, BPL, Videocon International, Bharat Forge and Nagarjuna Fertilisers have come crashing down to earth from their startospheric price rise. Three days into the trading in the current settlement on the BSE, BPL, Sterlite and Videocon International are already on the lower end of the weekly cap imposed by the exchange.

Trading in kerb in two of the three Harshad Mehta jewels witnessed a further onslaught by those desperate to exit. BPL had a seller at Rs 285 in kerb against the official close of Rs 306.25. The Videocon International stock had a seller at Rs 85 against the official close of Rs 111.50. Besides, BPL and Videocon, trading will not take place in Sterlite Industries (close Rs 204.40) for the remaining two trading sessions on Thursday and Friday on the BSE unless buyers emerge. This implies that these stocks have lost 25 per cent of their value since Monday. There were outstanding orders of at least five lakh shares in each counter when they hit the lower end of the weekly cap.

There are various theories doing round in the market explaining the development. While Harshad Mehta was not available for comment, all Harshad favourite stocks have taken a beating. Brokers attribute to the huge position built up in these stocks. They believe that there are operators who have accumulated the stock on the recommendation from the big bull. The long purchase position on BSE as of yesterday in BPL was 28.84 lakh shares, Sterlite was 20.67 lakh shares and Videocon International was 56.85 lakh shares. The position in BPL on Tuesday was 29.04 lakh shares, in Sterlite was 21.03 lakh shares and Videocon International was 57.06 lakh shares.

All long positions have fallen marginally. Brokers say that there are all sellers in these stocks. "The quantity is not important. They are willing to sell more than the demand. It remains to be seen if they can continue to hold on to these huge positions. They are making desperate attempts to sell. This is a clear indication that there is a payment problem," a dealer at a leading institutional brokerage said.

The Nagarjuna Fertilisers counter also has an outstanding long position of 15.47 lakh shares. A huge pile of the overnight long position was unwound yesterday.

As of Tuesday, the long purchase position on BSE in the stock was 29.04 lakh shares. Operators have managed to sell about 14 lakh shares.