Almost all the stocks recommended by the former BSE big bull, Harshad Mehta, in November last year have appreciated by more than 25 per cent. The Sensex has, however, appreciated by only approximately 9 per cent since November 10, 1997.
The selection of these stocks is based on the basis of various reports that appeared in different publications in November. These stocks were recommended on the website by Mehta.
The price movement of all these stocks is a clear indicator that even if he is not directly involved in dealing in these shares, Mehta certainly enjoys a following that believes in him.
Harshad Mehta says that the search list (see table) was produced after going through 1500 companies. The list was put out considering the new shape and dimension that the market is taking in the light of mergers and acquisitions. There was an expansion in A group stocks. However, trading continued only in a few pivotals. The search list was put out with an intention of expanding the market activity, he said.
Brokers say that while it is difficult to establish if he actually deals in these shares, investors will continue to follow him.
The rise in these stocks will result in more investors waiting for him to release his next set of recommendations. While not all stocks are fundamentally good, many of them have the potential to give good returns, a dealer at a leading institutional brokerage said.
R C Mathur, executive director, Bombay Stock Exchange, is of the view that it is not possible for them to take a view on the issue. He has told us that he never makes any recommendations. He was a very strong player in the market and people used to believe him, and they continue to believe him even now, he said.
Harshad Mehta started his website and has been producing recommendations.
However, following BSEs objection, recommendations have been converted into research findings. If it is not possible for me to say which stocks investors should buy or sell, I can say I like these stocks, Mehta says.
The BPL counter has witnessed a five-fold jump in its price. While it is not easy to link up Mehta with moving the stock, many analysts believe that the stock is overvalued at these levels.
A jump from Rs 54 levels to Rs 270 is a surprise for BPL, added the dealer.
Mehta believes that people are not able to digest the change taking place in the counter.
The stock is expected to witness a jump in net profits to Rs 85 crore in March, 1998 and Rs 120 crore by March, 1999. This implies an earnings per share of Rs 47. This is on an equity of Rs 27 crore, Mehta said.
