After KGN, another penny stock becomes a monster

Written by Markets Bureau | Mumbai, May 22 | Updated: May 24 2008, 05:02am hrs
The penny or Z category stocks is on the boil. After the huge surge in share price and subsequent suspension of KGN Industry shares, another such stock, Slyph Technologies, saw an unusual rise on Thursday.

The company which had its shares delisted in March 2001 (traded at 80 paise), was relisted on Thursday. It opened at Rs 152 on the BSE and soared to Rs 800 before closing at Rs 199.20. Slyph Technologies, which was earlier involved in housing finance, has now morphed into a computer software developer.

A senior market participant said, There are speculative elements in the market who are indulging in price rigging. They may try to hike the price misleading other investors and as the stock price increases they start offloading their stake in the up run. Also, in order to have a better price discovery of the stock, the exchanges dont have any circuit filters on the first day and these elements take advantages of this.

This immediately follows the KGN Industry price spurt. On Wednesday, the BSE had suspended trading in the scrip in the afternoon as it soared to a high of Rs 55,000 from just Rs 72.

The scrip got relisted on the exchange after a break of seven years and only 827 shares of KGN changed hands on Wednesday before the bourse suspended its trading. On Thursday, the scrip gained Rs 97.07 or 1.86% to end the day at Rs 5,119.23.

In a media release, the BSE said, As per the prevalent policy of the BSE, on the opening day of trading of the scrip post revocation of suspension, there are no price bands, in order to allow the market to discover the price of the scrip. Further investigations are being carried out to examine the placing of orders at unrealistic prices (of KGN) and appropriate action, if any, will be initiated against the concerned entities.