Fundamentally nothing has changed for the 465 stocks trading in the B2 category of the Bombay Stock Exchange, nothing at least to justify a price appreciation of between 100 per cent and 2,400 per cent in the past three months.
Their sudden surge to 52-week highs in the past three months, after falling to their 52-week lows, between January and March, defies all logic.
The only plus point about these stocks was that about three months ago they were available at prices from which no further depreciation in the market value was possible.
More From This Section
Of the 465 stocks, as many as 72 were quoted less than Re 1, 129 stocks were available between Re 1 and Rs 2, about 164 of them were traded between Rs 2 and Rs 5, around 62 between Rs 5 and Rs 10 and only 40 were traded at over Rs 10.
Fundamentally, half of them are loss-making companies. During the past four years, their aggregate losses were a whopping Rs 13,689 crore compared to an aggregate net profit of Rs 1,887 crore for the profit-making ones.
In 2001-02, the combined losses of 162 companies aggregated Rs 2,979 crore. In 2000-01, net losses of 188 companies were at Rs 4,097 crore. In 1999-00, net losses of 175 companies aggregated Rs 3,652 crore.
In 1998-99, around 174 companies reported an aggregate net loss of Rs 2,960 crore. These companies are slow in providing financial details. For 19 stocks, no financial details are available with the Business Standard Research Bureau in the past four years.
As many as 52 companies have not declared their results since 1999-00 and 147 of them have not come out with financial details for 2001-02.
Also, these stocks lack trading frequency. Around one-thirds of stocks were traded only once in a week in 2000-01. And, except for about one-tenths which were traded daily, the balance were traded two to three times a week.
It is likely that the gullible investors have got trapped in the stocks due to their low liquidity in the market. In 1999, the yearly average volume of 467 stocks was a modest 8,000 shares per day or an average of 17 shares per stock per day. In 2000, the average daily volume rose to 12,200 shares and in 2001, it climbed further to 16,500 shares per day. In May-July, the average volume rose to 26,675 shares per day or only 57 shares per stock per day.
ETP Corporation, the highest gainer in B2 group (up 2425 per cent in the past three months), has surged from Re 0.80 on April 30 to close at Rs 21.50 on July 11. The aggregate volume was 6.295 million shares in the past three months compared to a grand total of 1,276 shares in 2001 and 85,750 shares in 2000. The stock had moved around Re 1 and Rs 10 between 1999 and 2001.
The steel companies head the gainers