Volumes surge in Sebi-indicted penny stocks

Mumbai, Nov 17 | Updated: Nov 18 2005, 05:45am hrs
Six of the seven penny stocks where market regulator Securities and Exchange Board of India had come down with a heavy hand for speculative activity and an alleged promoter-operator nexus are once again showing heavy trading volumes on the bourses.

Its not even been two months since the Sebi acted on seven stocks - IFSL, Prime Property, Konkan Tyres, Minal Engineering, Consortex Karl Doelitzch, Ind-Tra Deco and Eltrol Ltd - which eventually led to a fall in their prices as investors went on a selling spree.

The average weekly trading volumes in most of these stocks are once again on the rise, when compared to the last monthly or fortnightly volumes. However, the prices are hitting the lower circuit almost on a daily basis.

Take the case of Ind Tra Deco Ltd. The latest weekly average volume was pegged at 1.65 lakh shares, higher than last fortnights average at 1.15 lakh shares. The monthly average volumes for the last two months were even lower at 56,480. This shows that the volumes are steadily picking up.

Experts say that operators have, once again, gone back to their tried and tested method of ramping up the volumes to lure small investors. An investment consultant said, If a small investor goes to a broker, he is told that it is almost two months since the Sebi order was passed and the repercussions have already been felt. Now, no more damage (downturn) is possible and investing in these stocks is not dangerous any more. The average investor falls in the trap and re-enters without being aware of the dangers ahead.

In the case of IFSL Ltd, the weekly average volume at nearly 9 lakh shares is higher than the fortnightly average volume of 8.3 lakh shares. Konkan Tyres Ltd has also witnessed a rise in the weekly volume at 10,234 shares. The fortnightly average volume was pegged at 6,000 shares only.