Two-Penny Stocks Witness Volumes Spurt

Close on the heels of the upswing in the specified group and B1 group stocks, two-penny B2 stocks have witnessed a sudden spurt in trading volumes.

Some of the scrips, loosely termed `Kalbadevi stocks' (the name comes from a central Mumbai locality), which have been witnessing this phenomenon are Gujarat Siddhi Cements, SRG Infotech, Shri Ishar Alloy, Silcal Metallurgy and Ucal Power systems. Trading volumes in these scrips, have risen up to nearly 50,000 shares as against the normal few hundred shares.

On the BSE yesterday, the Ucal Power scrip closed at Rs 4.05 (17,800 shares traded), SRG Infotech at Rs 1.35 (1.62 lakh shares), Shri Ishar Alloys at Rs 3.15 (19,900 shares), Gujarat Siddhi Cements at Rs 4 (58,900 shares) and Silcal Metallurgy at Rs 3 (27,900 shares).

 

Marketmen, however, feel that it is too early to say if this is an indication of the depth spreading to all segments of the market in the wake of the recent rally witnessed at the bourses. A section of the market feels that the volumes have been generated to attract retail interest in these counters. Said a dealer at BSE brokerage M/s P K Advani : "Most of these small-cap stocks are highly illiquid in nature. Once an impression of liquidity is created at these counters, retail investors move in. Prices of these scrips then move up which gives an exit route for those players who had built up huge positions at these counters."

Another section of the market feels that the interest may be due to lesser downside risk.

Said a broker: "Those who invest in these two penny stocks consider the money invested as good as lost. If the share price moves down, the down side risk is very low, but if the reverse happens, the investors make a neat profit."

Senior BSE officials said the positions of the brokers who deal in these stocks were being monitored and no irregularities have been observed.

Said an exchange official: "Whenever there are unusual volumes, we verify the brokers' dealings. Very often most of these abnormal volumes arise out of cross deals or negotiated deals."