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99,900% rise? You could have been a Buffett today!

May 23, 2008

Yes! I am not kidding, you could have been another Warren Buffett today. On the back of a share which showed a super celestial meteoric rise of 99,900% in an intraday trade. Well, the irony is the dream just ends there. This company has no fundamentals and even worse its a penny stock.

Okay, lets get into specifics. Sylph Technologies[SYLPH] which is a perfect penny stock, last traded on BSE at 80 paise. Thats circa 2 cents with the going exchange rate. Yesterday at the opening bell of BSE, it got relisted and within seconds shot to a whopping Rs 800/share. Around 99,900% rise. This whopping rise, comes at the back of an archaic decision of BSE to not have any filters on the opening day of a stock to facilitate better price discovery, and of course the usual eyewash, “to enable the members to trade at a realistic price”. It finally closed down at a 24,900 % rise.

Not far from the action, another Z category stock, KGN Industries[KGN] zoomed past all resistance, all supports, making a mockery out of fundamentals and technicals to rise to Rs 55,000/share from just Rs72/share, as it relisted. For that brief moment, it was the eighth largest company with respect to market capitalisation. Just 76,000% rise 🙂 . To give you the scale and size, think about Reliance India Mobile, with around 14 million subscribers in its pocket. Okay? now think about KGN Industries, okay, you dont get any picture of KGN then, perfectly acceptable. For that brief moment it was just behind RIM in market cap.
It is not surprising to know, that it too is a penny stock, with just 847 shares floating around and thus heavily susceptible to operator action. And indeed it was. This skyrocketing actually set the alarm bells ringing in the BSE surveillance department and soon there after the trading was suspended in these scrips.

Those in the know said the loophole of so called price discovery was, to put in polite terms, made a full fledged mockery by a few canny operators and brokers.

Well, I say, it forms good and humorous stories in business circles and socialite parties. And yeah, perhaps if you are feeling self-destructive go for them. Who knows you may emerge shining!

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