The Hindu Business Line : Sylph does a KGN, soars to Rs 800

Another penny stock, the Indore-based Sylph Technologies vaulted to a high of Rs 800 against the price of 80 paise that it commanded more than seven years ago, when it last traded.

On Wednesday, KGN Industries Ltd shot up to Rs 55,000 a share after relisting on the BSE after a gap of seven years. BSE suspended trading in the stock in the middle of the trading session.

However, in the case of Sylph Technologies, the stock later pared gains and finally closed at Rs 200, still a gain of a 24900 per cent as recorded by the BSE.

Sylph listed at Rs 152 and the day’s trading recorded an exchange of 6,500 shares against a total of 73,600 shares in the public float.

The public shareholding in Sylph Technologies shares are 35.86 lakh but there are only 73,600 shares in the dematerialised form which reduces tradable public float and leaves it open to manipulation. Similar was the case with KGN where only 8,200 shares existed in the demat form out of over 1.13 crore publicly held shares.

Both are Z-category stocks.

In the case of KGN those who indulged in trading are now in for a hefty penalty.

Being a Z category stock, the settlement is based on trade-to-trade basis which means if the buyers or seller is not able to honour delivery there is a “financial close out” under which they have to pay up the highest price plus ten per cent.

KGN on Thursday closed 1.86 per cent lower at Rs 5,119.22 as against the earlier closing price of Rs 5,216.30 fixed by BSE through a circular on Wednesday.

Allowing price discovery on re-commencement of trading is proving to be an embarrassment for the exchange. These two incidents happened just a couple of months after SEBI removed the price bands for the first day of recommencement of trading on the ground that a price band in such an event did not allow for fair price discovery.

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KGN relists after 7 years, zooms to Rs 55,000

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