One of the most recent events was a mad run in PSU stocks like MMTC, Hind Copper, Dredging Corporation etc ( Disclosure: We did have intra day buy calls on hind copper and dredging corporation to be part of this run though booked on the first 2-3 days )
Now let us look at this stock --- MMTC – It doubled in less than 2 weeks !
- > The stock has only 0.66 % shareholding with the public and rest with president of india. So out of the 66 lakh shares which there are hardly 12-15 lakh are individual shareholders and rest must be with corporate bodies.
-> So the stock is bound to such manipulations.
-> Until end of december the stock would trade only 2000-5000 shares. Suddenly this rocketed to 1000 levels from 450 thats a rise of 100% in extreme short time with volumes of 5-20 lakh shares. This is like 100 – 500 times the average volumes.
-> I had tweeted that there is something fishy about this PSU run and now during the weekend got time to look into the details.
- > On one of the days in this run MMTC had a volume of 27 lakh shares. The company hardly has that much floating stock.
This made me look into the delivery percentage to total volumes.
| Date | Price | Volume | Delivery | Delivery Percentage |
| 12/26/2011 | 496.4 | 4382 | 713 | 16.27% |
| 12/27/2011 | 490.4 | 3530 | 925 | 26.20% |
| 12/28/2011 | 477.75 | 1387 | 740 | 53.35% |
| 12/29/2011 | 469.65 | 1363 | 520 | 38.15% |
| 12/30/2011 | 537.9 | 329990 | 9755 | 2.96% |
| 01-02-2012 | 519 | 154440 | 6194 | 4.01% |
| 01-03-2012 | 619.75 | 740284 | 14203 | 1.92% |
| 01-04-2012 | 729.8 | 2702927 | 23602 | 0.87% |
| 01-05-2012 | 779.3 | 1517691 | 21192 | 1.40% |
| 01-06-2012 | 826.7 | 1546722 | 22608 | 1.46% |
| 01-07-2012 | 895.65 | 572392 | 22095 | 3.86% |
| 01-09-2012 | 968 | 1766792 | 35092 | 1.99% |
| 01-10-2012 | 981.65 | 836839 | 20997 | 2.51% |
| 01-11-2012 | 951.5 | 452258 | 21234 | 4.70% |
| 01-12-2012 | 947.65 | 703626 | 22898 | 3.25% |
| 01/13/2012 | 952.6 | 231395 | 12945 | 5.59% |
- > Now this data of delivery percentage some really revealing statistics. On one of the days only 0.87% of total volumes was market for delivery. Total Volume was 27 lakh shares on that day.
-> Implies that 99% of the trades were squared in the day.
-> The question now comes is the stock doubled in 15 sessions with less than 2 lakh shares of delivery marking.
- > The delivery data is very similar for stocks like Hind Copper, STC India and Dredging Corporation.
- > None of these stocks have Free Float enough to trade such high volumes. So basically what we saw is a mob who just kept buying and selling these stocks or there was some concerted effort to manipulate these stocks.
We had a buy trade on Hind Copper at 180-200 and STC India at 140-160 roughly for a couple of days ( technical entry at start then could not accept the manipulation) and then once even had a short trade which gave a small stop hit if i remember well.
So whatever be it one needs to understand that Hind Copper, STC India, Dredging Corporation and MMTC will be susceptible to such sharp manipulations and above all for investors the stocks may well be avoided unless they have done a detailed study. I have no fundamental views on the above apart from reading STC India and Dredging corporation having good assets.
But this move definitely was a motivated one and is worth a look from Regulatory Authorities.
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Happy Investing,
Nooresh Merani
January 18, 2012
thanks a lot nooresh ji,
keep giving such wonderful insights to small investers and traders to safe gaurd their hard earned money from these blood thirsty sharks and whales.
all the best whishes for your hard work.