Company decides to hold board meeting for bonus shares and share peaks and then crashes
These days one hears that SEBI has tightened surveillance and investors need not get worried about manipulation been done by Promoters and so called market intermediaries or friendly associates. Here is an example of rampant manipulation where the company and its Promoters have committed murder of the investor. The question is will they get away or get caught?
The company announced on the 10th of October 2012, that the board of directors of the company would meet on the 18th of October for consideration of issue of bonus shares if any. The board did meet and declared a bonus issue of 1 share for every 5 shares held. The announcement of bonus shares normally has a positive impact on share price. In the case of Pradip Overseas Limited what is surprising is that the share price peaked out on the very next day of announcement of board meeting for bonus issue and the price began falling from the next day itself. The share reversed on the 11th of November and has been on a decline thereafter.
What is really surprising is the fact that volumes began to increase and so did the price. The BSE saw volumes increase from just less than 9000 shares increase 100 fold to just over 9 lacs. The price rose from Rs 82 to an intraday high of Rs 127.70and then the price fell even before the announcement of the bonus ratio to a low of Rs 49.65. What is really shocking is the fact that the bonus meeting announcement was made on 10th October and the share peaked and reversed on the very next day the 11th October.
Price movement and manipulation on the NSE was in no way less than what one saw on the BSE. Here the volume rose from about 11,000 shares to a staggering 31.64 lac shares and the peak volume was on the 11th of October. The volume rose a staggering 287 times.The price rise a similar Rs 82 to Rs 125 and then a low of Rs 50.15. One wonders what prompted the Promoters to take such a drastic step and what was the objective? Why rig the price and make innocent investors enter the share, make an announcement of holding a board meeting and then dump the share. This is a very serious offence and has certainly trapped innocent investors. The regulator must enquire and punish the guilty.
BSE Prise
| Open | High | Low | Close | WAP | Traded Qty | Del Qty | % Dely | |
| 1-Oct-2012 | 83.20 | 83.20 | 82.25 | 82.30 | 82.39 | 8756 | 4027 | 45.99 |
| 3-Oct-2012 | 83.60 | 83.60 | 82.30 | 82.60 | 82.61 | 13379 | 7075 | 52.88 |
| 4-Oct-2012 | 82.35 | 95.35 | 82.25 | 91.50 | 85.11 | 334852 | 270271 | 80.71 |
| 5-Oct-2012 | 93.00 | 99.00 | 86.05 | 97.50 | 94.99 | 36180 | 13410 | 37.06 |
| 8-Oct-2012 | 80.20 | 104.30 | 80.20 | 103.05 | 100.22 | 244098 | 213047 | 87.28 |
| 9-Oct-2012 | 105.25 | 114.00 | 95.30 | 107.05 | 105.78 | 272419 | 25382 | 9.32 |
| 10-Oct-2012 | 110.00 | 111.95 | 104.35 | 109.10 | 107.76 | 174241 | 47308 | 27.15 |
| 11-Oct-2012 | 109.50 | 127.70 | 89.15 | 96.00 | 108.6 | 890990 | 92845 | 10.42 |
| 12-Oct-2012 | 91.00 | 91.65 | 76.85 | 76.85 | 81.76 | 744800 | 134980 | 18.12 |
| 15-Oct-2012 | 75.00 | 75.00 | 61.50 | 61.50 | 64.17 | 816505 | 172377 | 21.11 |
| 16-Oct-2012 | 60.00 | 63.85 | 55.55 | 61.25 | 58.68 | 911666 | 105713 | 11.60 |
| 17-Oct-2012 | 61.55 | 63.75 | 55.15 | 55.15 | 57.31 | 670427 | 148534 | 22.16 |
| 18-Oct-2012 | 53.00 | 57.95 | 49.65 | 56.15 | 54.74 | 820214 | 132797 | 16.19 |
| 19-Oct-2012 | 56.25 | 56.90 | 50.65 | 51.25 | 52.59 | 411882 | 75880 | 18.42 |
NSE Prise
| Open | High | Low | Close | WAP | Traded Qty | Del Qty | % Dely | |
| 1-Oct-2012 | 82.95 | 83.35 | 82.15 | 82.30 | 82.53 | 12610 | 2042 | 16.19 |
| 3-Oct-2012 | 83.15 | 83.15 | 82.25 | 82.35 | 82.54 | 11045 | 1410 | 12.77 |
| 4-Oct-2012 | 82.25 | 95.00 | 82.25 | 91.45 | 84.82 | 404895 | 307705 | 70.00 |
| 5-Oct-2012 | 94.90 | 98.95 | 90.75 | 97.30 | 93.79 | 256153 | 198400 | 77.45 |
| 8-Oct-2012 | 99.00 | 104.05 | 96.90 | 102.65 | 101.11 | 288399 | 227383 | 78.84 |
| 9-Oct-2012 | 98.00 | 114.65 | 95.00 | 106.3 | 104.56 | 924455 | 69528 | 7.52 |
| 10-Oct-2012 | 105.00 | 111.70 | 104.35 | 107.20 | 107.12 | 452054 | 79696 | 17.63 |
| 11-Oct-2012 | 107.00 | 124.80 | 87.55 | 95.65 | 106.95 | 3164436 | 481581 | 15.22 |
| 12-Oct-2012 | 92.00 | 92.00 | 76.55 | 76.55 | 81.37 | 1582409 | 520044 | 32.86 |
| 15-Oct-2012 | 70.05 | 73.70 | 61.25 | 61.25 | 64.30 | 2775477 | 574463 | 20.70 |
| 16-Oct-2012 | 59.50 | 62.90 | 56.1 | 60.9 | 58.19 | 2070406 | 605879 | 29.26 |
| 17-Oct-2012 | 61.45 | 63.00 | 54.85 | 54.85 | 57.44 | 2056877 | 420934 | 20.46 |
| 18-Oct-2012 | 53.50 | 57.8 | 50.15 | 56.1 | 54.29 | 1616256 | 166172 | 10.28 |
| 19-Oct-2012 | 55.70 | 57.00 | 50.6 | 51.35 | 52.67 | 841704 | 243593 | 28.94 |
From the above table details of the daily price, quantity traded, weighted average and daily delivery details on the BSE and NSE are given since the 1st of October 2012. The table clearly shows how the investors have been conned by the Promoters acting in concert with persons associated with this white collar crime on investors.
From the above two charts one finds that the whole event has been planned meticulously and there was no need for any such bonus announcement. The share price has been quite consistent for the last few quarters in a broad range of Rs 70-90 and hovering around Rs 80. Why this jump to over Rs 124 coinciding with the bonus meeting and then post the actual bonus announcement crashing to Rs 50 or thereabouts. Who gained? Who lost? What was the objective of letting the share fall so sharply from the traditional Rs 80 range to the Rs 50 range? How did the promoters benefit and why the sudden bonus announcement?
Answers to these questions would be available only after a thorough investigation and in the interest of investors and their safeguard one would expect that the regulator SEBI does look into the same.
