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Wednesday, September 26, 2007

Hold your nerve

Mind-Boggling price rise in several scrips in last 7-10 days is mindless frenzy. Such happenings make us wonder whether this writer is an old fashioned fool who is not trying to benefit by participating in this frenzy or, those who are buying now scrips with weak financials at wonderful prices are greater fools. Only time will tell.

1)RNRL Equity is 736 crs., Rs. 5/- F.V. Share price has doubled in 3-4 days. Presently, company has hardly any business. Company is making statements about future plans. Definitely, gold mines are not waiting in its future. Games being played at this counter are beyond understanding. Sell.

2) Orissa Sponge: This counter is non-stop upper circuit since last 1 month. Company has been making heavy losses since last 5-6 quarters. It has small Sponge Iron Plant and a Cogen Plant. Company has been allotted Ore Mines but same may become operational only after 6-9 months. Gullible investors are being lured everyday as operators giving 4 digit share price target. Extremely weak fundamentals. Future is better but such high price is not warranted as if performance of next 5 years is already factored in.

3) IFCI (Rs. 105/-): It is an irony that one of the most inefficient finance company is quoting much higher than Syndicate Bank, Allahabad Bank, Andhra Bank, Vijaya Bank etc. etc. etc. As if, Equity participation of FII will work as a magical wand and fortunes of IFCI will hit the star-packed sky. Operators do not feel any shame in giving price target of Rs. 700/-.

4) Some Analysts have started recommending textile scrips although, rupee continues to appreciate. Let me remind the investors that textile revival very unlikely for next 1 year. Do not get carried away by 'Bottom-Out' stories and stay away from this Ind. for the time being.

5) Indorama Synthetics: On Equity of 131 crs., June Quarter profit is paltry 2 crs. This company has never rewarded its share holders and profit margins are always hopeless. Don't buy.

6) Reliance Energy (Rs. 1100/-): Share Price has gone up by 60% in 1 month. Perhaps, parameters of investor friendly company have changed completely. Company has not given bonus shares for so many years. A small dividend that's all. And always in hurry to collect more and more money. Big rigging operation going on as company want to raise Rs. 12,000 crs. in Dec. 07 by placing Equity at Rs. 1200/- per share. Why share price is zooming? Some inside circles say ' You people do not know real inside story. Once this story is out, share price will be Rs. 5000/-'. This is another trick to con the investing public.

7) Reliance Petroleum (Rs. 170/-): It is really shocking that analysts are putting a price target of Rs. 200/- based upon DCF for 09-10 although commercial production is yet to start.

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