The Hindu Business Line : Big balloon for small-cap stocks

The BSE Small Cap index corrected by around 7.5 per cent in the last one week, but there are hundreds of stocks beyond the index, which are yet to correct.

Gloomy picture

According to Thursday’s circuit summary on the BSE, 947 stocks hit the lower circuit filter against the 129 stocks that hit the upper ceiling. Advance/decline ratio also painted a gloomy picture as 87.3 per cent of the total traded stocks on the BSE (2,912 stocks traded), ended in red against just 12 per cent (or 351 stocks) which closed the day in the green.

1,000% returns

According to a study by Mr Ajay Jaiswal of Angel Broking, in the month to January 4, out of the top 200 companies on the BSE in terms of percentage return, top companies had returned more than 1,000 per cent.

On the top of this list was Zigma Software. The stock, which had recently been split from Rs 10 to Re 1, recorded a monthly gain of 1,364 per cent on January 4. It finished 5 per cent down on Thursday after registering a 52-week high on January 8 at Rs 21.42.

Mr Jaiswal said of the top 1,000 gainers, 156 had shown more than 150 per cent return and 163 stocks had given more 100 per cent gain.

No P/E ratio

Interestingly, out of the 1,000 BSE gainers, 694 did not have a price-to-earnings ratio, indicating negative return or no data. Of the top 50 in the list, only six had recorded P/E.

“Needless to mention that most of these companies have no historical track record of financial performance and little information on their complete nature of operations”.

For example, Zigma had been recording a falling net income and in 2006-07 had recorded a total income of Rs 9.48 crore and its non-promoter holding is placed at 99 per cent.

Among the other stocks which has shown extraordinary market gains, two have moved up on Thursday — Techno Forge and Radhe Developers by 5 per cent each on the BSE. Radhe’s traded quantity was 1.24 lakh shares, but Techno Forge has recorded a volume just 100 shares.

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