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Monday, May 4, 2009

How operators are trapping investors

Our maestro Hemant gupta sahab penned amazing notes regarding craps.Heres all about them.

1)Scripscan:Mediaone Global Entertainment Ltd

Story:This company is headquartered in Chennai with a branch office in Bengaluru and a wholly-owned subsidiary in London. Its focus is on film exhibition along with production and distribution. One of its recent productions was titled Dhaam Dhoom. Probably, the stock is also inspired by the title? It has weathered the global crisis to zoom by a humungous 1,325% in a matter of eight months – from Rs8 in August 2008 to Rs116 currently. Do its fundamentals warrant this explosive rally? Well, Mediaone reported a loss of Rs49 lakh on a turnover of Rs10.34 crore in the December 2008 quarter. SEBI has a sophisticated surveillance system. Is it looking at a stock like this at all?

2)Scripscan:Channel Guide India Ltd

Story:If you had bought this share in December 2008 when it was trading at Rs3, you would have made a profit of 500%. What does this company do that justifies such a huge rise in its share price over four months? Channel Guide India is apparently into the broadcasting business. The company also focuses on “dubbing regional programmes on a common platform, multi-channel commercial teleporting, production of low-budget telefilms.” This is a hot area and so Channel Guide’s numbers must be great, right? Well, for the December quarter, the company has reported an operational loss of Rs11 lakh on an income of just Rs41 lakh. But then this company has been reporting losses for the past three quarters and not just in December 2008.

3)Scripscan: CNI Research Ltd

Story:This company is apparently in the business of disseminating “daily stock market insight with crucial FII nos” through its website As it says about itself: “This website has been developed by its team of highly qualified technicians mainly Chartered Accountants, Research Analysts and Reliable Informers who are associated with FII’s, Domestic Institutions and Market Operators.” In December 2008, the stock was at Rs2.50. It is now trading at Rs11 – a rise of 425%. A turnaround story maybe? Look at the fundamentals. For the December quarter, it earned Rs28 lakh from its business operations and incurred a loss of Rs99 lakh in trading! Perhaps ‘reliable informers’ associated with FIIs, domestic institutions and market operators probably sums up why the stock is doing so well in a market like this with such poor fundamentals. Sure, SEBI and BSE both have investigation departments; but so what?

4)Scripscan:DB(International Stock Brokers Ltd

Story:The fortunes of stock-broking companies are directly related to market performance. If the period between 2003 and 2007 was indisputably the best time for these companies, 2008 and 2009 have turned out to be washout years. Obviously, one would have expected stocks of equity-broking companies to be performing poorly. However, the share price of Delhi-based stock-broking company DB (International) has been on a rampage – going from mere Rs12 in January 2009 to almost Rs44 now – a rise of nearly 275% in three-and-a-half months. DB (International) is a member of the NSE and a SEBI-approved depository participant of CDSL active in the primary as well as the secondary markets. But is it doing so well as to warrant such a tearing rally? Its operational income for the December quarter was a mere Rs68 lakh, down a huge 82%from the year-ago period. That quarter, it earned an operating profit of just Rs14 lakh down 96% from the comparable period last year! This is a joke. Will the stock exchange and the regulator ever investigate such blatant cases of manipulation?

4)Scripscan:Kadamb Constructions ltd

Story:From just Rs13 in December 2008, the stock of Kadamb has consistently shot up and currently trades at Rs40. This translates into a rise of more than 200% over the past three-and-a-half months. It is immune to slowdown, credit crunch and such minor problems. According to the company's disclosure to the BSE in end-December, “the business of the company is under two segments, i.e., in constructions and the other relating to derivatives trading. However, no activity has been carried on during the period under review in the construction segment. The above results relate only to the derivatives segment.” It reported operational revenue of Rs2.46 crore for the December quarter and a loss of Rs8 lakh for the same period.

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