Technical view by Nooresh » scams

Screener – Low Delivery Percentage Stocks – Possible Circular Trading Stocks – Elder Pharmaceuticals,

nooresh — Wed, 27 Jul 2011 07:17:49 +0000

Before i go into how a low delivery percentage can be a good screener to understand high risk stocks or speculative built up , circular trading and so on lets look into what it means.

Delivery Percentage or percentage Delivery marked-

Let us understand it through an example.

For example –

Bata India the total traded volumes are 324421

Deliverable Quantity – 35428

% of Delivery Quantity to Traded Quantity – 10.92%

This implies out of 3 lakh shares only 30k shares or roughly 11% of the traded quantity was marked for delivery. This shows that majority of the trades were squared of in the day.

There could be a slight variance if there is short delivery but its miniscule number. You can see the percentage on www.bseindia.com and www.nseindia.com if you look into the get quote as well as in archives section you can see deliverable quantity to traded quantity for a very long span of time.

Now how do we use this statistic for some insights

The thumb rule says Higher Delivery marked with higher volumes and a price rise indicates bullishness and vice-versa.

But one of the major thumb rule is very low Delivery percentage is what is a strong red signal at times.

Let us look into examples which will give us a better insights.

1) Elder Pharmaceuticals – Delivery percentage

As always i would start with a technical picture which gives me the first hint

The stock chart looks exciting but what surprised me is even though the stock has moved up and down but volumes have been consistent.

So i had a look into the deliverable percentage

The stock on certain days saw only 1-2% of the total traded quantity being marked for delivery. Everyone knows this stock is not a traders favorite so who has been trading the stock intra day.

Possible questions – Circular Trading, Managed ?

Other examples could be IPO or newlisted stocks

Classic observation – The total traded volumes are way higher then the floating shares. Percentage delivery marked will be 2-5%

Will post few more examples in the next post. Readers can also suggest such stocks.

Previously had posted similar articles on Ushdev International and Jaybharat textiles and Real Estate which later got into the SEBI net.

Similarly had posted about a manipulation on Wellpack Papers and Containers which has come down from 130 to 5

Mumbai 30-31st July

Mumbai 27th-28th August

Online Technical Analysis Workshop on

August 6th-7th

To know more on Discounts & Details contact: Kazim on 09821237002 or Asif on 09833666151

Cheers,

Nooresh

nooreshtech@analyseindia.com

Scam/Bribe and Timing !

nooresh — Thu, 25 Nov 2010 04:50:24 +0000

Although i might not be well qualified for the view on the current Scam or bribery announcement. But there are serious questions which can be raised which have not been answered.

- > Is the current scandal a scam for fake loans or is it a bribery scandal. If its scam is it going to turn into NPAs for Banks or is it just a case where bribes were taken to expedite the process ( Corruption is a way of life in government run institutions)

- > Which are the companies involved and whether loans are backed by assets or is the money been siphoned off which doesnt seem to be the case.

Now some questions which came in an evening discussions and not all are my views

- > Money Matters Financial was recently quoting at a market cap of 2000 + crores and had become a leader in the Debt Market. For the record ENAM was taken over at 2100 crores. Motilal is valued at 2400 crores.

- > So was it a case of too quick too fast for a company of such scale ? Also company could raise 465 crores recently in a QIP. Could it also be some rivalry or a market correction for business share!

- > Also the timing of the inquiry is very unusual a day before expiry at 2.30 pm. Will we see a huge cost of carry this expiry too !

- > Banking Stocks have already corrected 20% from the peaks before the scam.

- > Sensex has dropped 10% from the peak already on back of a stream of bad news.

One thing that struck my mind – Before January 2008 ! we saw a Participatory Note announcement and a 10% lower circuit making a low of 17k and ending up at 21k in next 3 months. Uncanny resemblance/ wishful thinking – Time will Tell !

The questions keep going and going but one thing which is certain is this will bring in good governance and Markets have never topped out with a scam ! but bottomed out with one.

Maintain the long term view on index. Best case we bottom around 19200/19350 or go to 18500-18800 ( only if there is some more forced news ). Investors can continue to start dipping into their cash reserves and keep buying till 18500-18800 or on move above 20100. Review the situation in end of December.

I havent been able to update much in the last week due to technical problem with my system. So will be back on track from next week.

Regards,

Nooresh

Birla Power, Birla Cotsyn, Birla Shloka Edutech, Zenith Birla – The Pump and Dump

nooresh — Wed, 20 Oct 2010 07:19:38 +0000

I have been writing on some market manipulations as well as pump and dump stocks for quite some time although its difficult to put in time to elaborate on the same.

One of the classical cases of such mistakes being made by small investors consistently is investing in Yash Brila Group companies.

The best part is every couple of months there is a company which comes out of the group with glossy advertisements on Business Channels !! and investors still end up buying them.

The first one to come on the radar for last few months has been Birla Power and the advertisements keep coming back every few weeks.

1) Birla Power Solutions Limited.

On the first look at the name it seems a power generation company but it is not. On the second look the promoter announces a 5000 crore expansion plan for which 1500 crore would be pitched in by the promoters into the SPV !

Whoa the best part market capitalization of the company then was less then 250 crores. Since then the market cap has now come down to 130-150 crores.

What is superbly exciting is was it day dreaming by the company of selling a dream

A youtube video – http://www.youtube.com/watch?v=TKSutwc_F_I&feature=related

Stock price – 3.8 on March 2010 on the day of video.

Stock price toda – 1.8 !

2) Birla Shloka Edutech

Before that we saw a similar built up on Birla Shloka Edutech and the company came out with a FPO.The stock was rigged up before the FPO to higher levels of 80-100 and then a FPO was done at 45-50 levels.

Followed by this with the rosy views stock went up to 80-90 again.

Since then the stock has been on a vertical decline to 20s and has recently jumped to 40s.

The best part about this company is it keeps changing names every few years. Sometime back when retail boom came in it was supposed to be named Birla Lifestyles. Now with the education boom its become Birla Shloka Edutech. I am trying to guess the next name

Although this company seems comparatively better to the other group companies but i wont even remotely suggest buying into it

3) Birla Cotsyn

I have had many queries where people have bought few lakhs of this stock and actually the same dumbasses recommending me saying you are getting a BIRLA COMPANY at 1 rs what else do you want:)

I had no answer but to say best of luck:)

Now first of all why did the company split from 10:1 after IPO was a serious matter of concern.

Also the general investors dont understand that majority of the brokers charge 5 paise fixed so one ends up paying 11% in brokerage in this trade!! Whoa how stupid would be to buy something at that brokerage.

Now the real dope.

In between seeing the speculative built up in the stock i had also suggested the stock could jump 30% in a short time which it did – Check the link here – http://www.nooreshtech.co.in/2010/08/midcapssmallcaps-rally-time-to-be-stock-specific-to-make-money.html

The stock did rally from 0.9 to 1.35 which is basicaly speculation. What was interesting is after the move there were advertisements on the Business Channels like CNBC talking glossy things about the company.

Followed by that the stock fell by 40% ! Why does the stock go down after such rosy advertisements !

4) Zenith Birla

The next on the radar was Zenith Birla. Yet again the same methodology. Stock moves up in a speculative manner followed by which nice advertisements giving big expansion plans, bonus etc come on the business channels.

The stock has announced bonus and dividends to allure the investors. Meanwhile stock is down 50% after the goodies played on CNBC ! i just saw the ad again

Some basic observations.

1) Why would a company spend so much on advertising on a Business Channel. Isnt that a useless expense. Why is it not spending money on selling its products.

2) The company announces rosy announcements and expansion plans giving high growth expectations. But there is no need to sell the story to the viewers of a business channel who are majorly the normal retail investor. There is hardly any company presentation for the institutions if the company needed to raise money.

3) Every few months there is an advertisement on one of the group companies.

4) The best part is all the stock are first pulled up by 30% before the advertisements.

5) The bestest part the stock falls by 40% after the advertisement with high volumes !

Although in the above observations none of them have been done on the actual fundamentals of the company or any digging into the facts and we see so many negatives. If one does more digging into the above companies there could be some glaring negatives:)

This is yet again a clear warning to investors to be wary of Free SMS, Rosy Advertisements, Multibagger Tips etc . If you have come to

The above view is purely personal and could be entirely fictional and bears no resemblance to any existing company – Do read the disclaimer – http://www.nooreshtech.co.in/disclaimer

Regards,

Nooresh

09819225396

WellPack Papers and Containers Ltd – 300 times Returns in 2 yrs – Market-Men were sleeping or Regulators ?

nooresh — Fri, 23 Jul 2010 20:27:26 +0000

Well i was looking into this company Well Pack Papers and Containers a few days back but research on Bombay Burmah Trading Corporation did not allow me to look into the details so i asked a good friend of mine Neeraj Marathe a diehard deep Value Investor to help me out.

Here is what we came out with

(By the way in the few days stock added another 50 crores of market cap since the chart was made.)

Well Pack Paper Containers

The paper sector is an extremely cyclical sector. The valuations that paper companies command are a testimony to this fact. Paper companies rarely get high multiples.

With this in mind, how much would you value a paper company, given that

· The company does not manufacture any type of specialized product.

· Its FY10 sales are about Rs.20 cr.

· Its FY10 PAT is about Rs.0.39 cr (39 lakhs).

· Its 3 year sales CAGR has been -2% (yes, its negative growth)

· Its 3 year PAT CAGR has has been -16% (yes, negative again)

Now, what if I tell you that over the last 3 years, the price of this company’s shares has gone up by 300 times or 3000 % and that today, its market cap is about Rs.950 cr!!!! Effectively, it is trading at 46x market cap to sales, 550x EV to EBIDTA and 2300x PE ratio!!

To add more perspective to this, West Coast Paper has a market cap of Rs.560 cr, TNPL has a market cap of Rs.850 cr.

Now this is hilarious. Why on God’s green earth should a company get this kind of valuation? Does it have hidden assets, like land? Nope! Does it have a super-dooper massive capex plan, which will make it one of the largest paper companies in India? Nooo it doesn’t. Then what is the deal here?

Now some more Hilarious Stuff:

As i kept digging deep there were more surprises in store

Also just see the list of bonus and split to keep the absolute price to not look exaggerated. ( Adjusted lowest price comes to 0.36 paise)

3:4 Bonus and 10:1 split in March 2010.

Dividend History – Nil

Now another interesting thing is the large volumes !!!

The stock trades 30 lakh shares everyday which in value terms is 30 crores or more!!

Another surprise the stock is in trade to trade ( T2T ) segment which means one cannot trade intraday in the stock.

The total shares in the company is 8 crores roughly. Public holding is 1/4 or roughly 25% which implies 2 crore shares in public hands.

The company trades 30 lakhs of deliverable quantity everyday – Circular Trading ???

Bottomline: Well this is the art of market allowing a stock to move 200-300 times:).

The last time I covered a similar company was JAYBHARAT TEXTILES AND REAL ESTATE which later got into SEBI Net but still quotes at 10000 Crores market cap J (though it went down 50%) – Read the full story through this link

Next week i would prefer to relax with overheated markets so might get time to write more on Market Manipulations and Stuff which doesnot give returns but valuable insights about the Market

Cheers,

Nooresh