The Hindu Business Line : Shifting of stocks to trade-to-trade, Z segments — Scrip prices dip as day trading loses sheen

AFTER the Bombay Stock Exchange (BSE) shifted some 700 stocks to the Z category and trade-to-trade segment in two lots (one became effective from September 10 and another from September 12) for investors' safety, most stocks have shown decline in volume and prices as speculative and day trading interest has all but vanished.

A sample of 13 stocks showed that barring one scrip, the price decline varied in other 12 between 2.8 per cent and 34.3 per cent.

Interestingly, during this period the BSE Sensex has declined by 3.06 per cent. The fall in volumes in these stocks ranged between 24 per cent and as high as 84 per cent.

Mr Ketan Thacker, a research analyst with Anagram Stockbroking, said: "The BSE measure shifting stocks in the trade-to-trade segment has definitely arrested the smart uptrend in the stock during the current rally which began in late April. These very counters were seen scaling new highs before they were shifted out of B2 or B1 categories."

Among the 13 stocks in the random sample, the daily average volume traded quantity in Granules India slumped by 84.17 per cent.

From an average of 96,700 shares a day in August, the stock's daily average volume during the period between September 6 and today has come down to 15,306.

The sharpest fall in the prices was noticed in Birla VXL (34.30 per cent) during the period between September 5 and September 18.

Other losers included Electrosteel Castings, JCT, Orissa Sponge, Elgi Equipment, Torrent Cables, Shivani Universal, Vimta Labs, Arvind Remedies and Avon Organics.

The Matrix Laboratories stock was the only exception, gaining by 2.81 per cent in terms of price and 79.49 per cent in terms of its volumes.

Arvind Remedies on September 5 announced its decision to issue shares on preferential basis to Citi Consult Emerging Markets of UK, an FII, at Rs 11 per share.

Despite this, the stock is currently languishing at Rs 3.7 and has gone down 32 per cent in terms of price and 37 per cent in terms of volume after inclusion in the trade-to-trade segment.

Mr A.A. Tirodkar, BSE Director (Finance) & Secretary, said that the BSE, as a natural step towards reducing trading irregularities, would look into the possibility of suspending some of the stocks that have been highly volatile and displayed irregularities in their trading.

He added that a new set of rules was being framed for listing and delisting.

Besides, corporate governance issues are also being seriously being deliberated up on by the SEBI.

The market regulator is also considering extension of the corporate governance ratings, already started by the credit rating agencies.

"Setting standard parameters for such rating and monitoring of this exercises are in the priority list of the SEBI.

The stock exchanges, however, would restrict their activities to surveillance and following of listing norms by the companies," he said.

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