Freeze frame

Rumour game

Although penny stock operators and investors are ready to dump scrips that fetched them easy profits, there is still a powerful segment that is unwilling to get out of the dubious business. Last Friday morning, even as Sebi8217;s action and the nation-wide raids on crooked government officials had started to panic the market, their disinformation machine was working overtime. Investors received messages from a few top brokerage firms telling them not to worry and advising them to hold on to their investments because the market would go up sharply next week. Their story was that 200 companies listed on the BSE would be transferred back from the trade-to-trade segment which is like a delivery v/s payment segment to the regular B2 section. This was probably based on the fact that trading restrictions, which are reviewed every quarter, were due for a re-look in the first week of October. Top Sebi officials tell us that there will be no review next week. The regulator has told the BSE and the National Stock Exchange NSE to continue with existing trading restrictions in view of the steep rise in stock prices and allegations of rampant manipulation in hundreds of stocks. Those investors who believed the fake rumours and held on to their shares may be in for a surprise. Action at last after having ignored all negative reports for months or years, the BSE and the NSE have finally decided to suspend trading in two notorious stocks 8212; SBI Home Finance whose business license has been suspended months ago and DSQ Software whose promoter has a Red Corner Interpol alert issued against him, the Board of Directors has resigned and much of its business has been sold. Curiously, both stock exchanges write to companies everyday to check the veracity of media reports.

But they only seem to check on news about expansion, diversification, acquisitions and fund raising and ignore reports about dubious dealings and insider trading in their selective verification process. In fact, DSQ Software ought to have attracted greater attention as it was extensively exposed by the Joint Parliamentary Committee that investigated the Scam of 2000. Intriguingly, the NSE suddenly reports 8216;8216;non-compliance with various provisions of the listing agreement/secretarial audit report8217;8217; and found the corporate response unsatisfactory. Sebi sources, however, say this belated action by exchanges has only been initiated at the regulator8217;s insistence.

Guru speak

These days brokers and investors track Rakesh Jhunjhunwala8217;s investments with as much enthusiasm as their own portfolio of investments. So when he chose to address a seminar on penny stocks last week, investors looked forward to some clues to how Jhunjhuwala made his investment decisions. The new guru, who is hugely bullish 8216;8216;we are going to see a bull market like we have never seen before8217;8217; about the market didn8217;t disappoint. In a speech full of homilies and quotations, he told investors that 8216;8216;the worst of investments are made at the best of times8217;8217; and that 8216;8216;bull markets are always the time for the worst excesses8217;8217;. Jhunjhunwala says, 8216;8216;You can8217;t make money on the market by being ordinary.8217;8217; He asks investors to make a list of potential investments and investigate them 8216;8216;like a detective or a hound8217;8217;. But when someone asked him what how he chose his investments, the answer was a stunning contradiction. 8216;8216;I don8217;t do any deep research; I decide an investment in five minutes based on a business model.8217;8217; Huh? But then, he also believes that 8216;8216;investment is more an act of wisdom than research8217;8217;. While talking about his Jhunjhunwala8217;s investments, one of his latest acquisitions, Vadilal Industries was to be suspended by the BSE from October 4 for non-compliance with the listing agreement. However, the company rushed to make amends and the suspension has been cancelled. suchetadalalyahoo.com