The Hindu Business Line : Singer India volumes spurt

According to market sources, thanks to circular trading indulged in by some operators, the counter registered a traded volume of 1,21,343 shares on the BSE against previous five trading sessions' average daily traded quantity of around 11,000 shares. The stock was up 16.19 per cent at close.

A fund manager said that the circular trading ploy was normally used by a market player when he wants to exit at a profit.

"Some retail investors may be lured only by the sudden volume and price spurt in penny stocks sans the fundamentals," observed an analyst of an institutional brokerage firm.

For the quarter ended June 30, 2004, Singer India reported a 23-per cent decline in the net sales, while its net loss increased to Rs 6.15 crore from Rs 0.48 crore in the corresponding quarter in the previous fiscal.

Mr Devarsh Vakil of Anagram Stockbroking pointed out that the company is trying to restructure its business.

"The domestic sewing machine market has been stagnating because of changes in consumer aspirations. Singer India now intends to enter the industrial sewing machine business in view of expected demand increase from the garments sector after the quota regime is off within next five months," he said. It has also planned foray into consumer durables and consumer electronics business.

Singer India has a spread-out retail outlet network, which can be leveraged for marketing new products with an aggressive strategy, analysts feel.

But they added that the implementation of the restructuring plan and the positives that might accrue needed to be seen on the balance sheet before any serious re-rating of the stock was considered.

"The consumer durables and consumer electronics businesses are a low-margin and high-volume game. The businesses do not have any entry barrier and are vulnerable to price wars," Mr Gul Teckchandani of Sun F&C pointed out.