The Hindu Business Line : Speculation rife despite shift to T-group

STOCK exchanges' decision to shift scrips to trade-to-trade segment (T-group) on regular basis has failed to avoid speculation. In fact, even after shifting the stocks to T-group, stock price of those companies have risen sharply.

An analysis of scrips, which were shifted to T-group by the BSE and the NSE in October this year and on various occasions this year, shows majority of the companies' stock prices have gone up between 25 per cent and 100 per cent.

Some of the stocks that went up even after they were shifted to T-group include DCM, BF Utilities, Hyderabad Industries, Medi-Caps, Monozyme, Nesco, UB Holdings, Nirlon, Gestener.

At present, almost 20 per cent (around 425-450) of the companies traded on the BSE are in T-group. On the NSE, also around 20 per cent are in trade-to-trade segment.

Even after the announcement this week, which listed large number of scrips to be moved and removed from December 6 from T-group, there is not much impact on the stock price.

But what had been seen is that when the scrips are removed from T-group there is sudden jump in the stock price.

As part of their surveillance system, stock exchanges shift scrips to T-group in which they feel that there is excessive speculation and manipulation.

Brokers said there are various factors for this trend. They said there are several good companies with strong fundamentals and due to this active buying interest.

While others said it is much more easier to manipulate a stock when they are in T-group as an individual cannot square-off his position on the same day. "Under normal trading, there is always fear of short sellers, but in T-group that is not possible".

A top official of a stock broking firm said stock exchanges are primarily doing this exercise as a sense of record.

But some brokers have suggested the need for clear guidelines for shifting scrips to T-group. "Bourses have the right to take such measures but investors need to be told the methodology of choosing such stocks," said Mr V.K. Sharma, Head of Research, Anagram Securities.