See sharp fall in Resurgere Mines in 2-3 weeks: Tulsian
: Does that deserve to go up 100% on its listing day? What are the fundamentals?
A: This is a classic case of momentum or operator play which we have been witnessing in case of other recent listings. If one compares this company with Sesa Goa, which right now is ruling at P/E multiple of 5-6 times and takes EPS projections given by Resurgere�s management of about Rs 50-55 for FY09, it is ruling at a P/E multiple of 10. This is purely a trading company having fixed assets of close to Rs 2 crore on a turnover of about Rs 400-450 crore. The prices will not sustain at these levels, so one will see a sharp fall in prices maybe after two or three weeks. One cannot take a call on those things right now but it is a classic case of momentum and operator play.
Q: What can one do with regards to such companies when traded volumes, due to operator activity or otherwise, actually cross such fundamental limits?
A: One will always notice these kinds of volumes in new listings because arbitrators find it very convenient to enter and exit these stocks with a gap of about Rs 1-2. If one checks the the data, which will be released by the stock exchanges at the end of the day, one will find that many arbitrators have carried out huge volumes at a difference of Rs 1 or maybe Rs 1.5-2. When the stock is driven by momentum or operators then interest is much more in the counter and one sees huge volumes.
Q: Do you think for such issues there should be some restrictions on intra-day arbitrage? Is that something the regulator can look at?
A: I do not think it can work. The Securities and Exchange Board of India, or Sebi, can always look into that data. I don�t think that one can really restrict all these activities with artificial restrictions like those on trading volume or price movement on the first day. However, one can check the allotment pattern. When one checks the activities carried out by insiders, one can always map the culprits or operators in the counter.
Q: What is your view going forward on that stock? Will the party be over today or going forward are there further gains on this one? Do you think this will slide to sub-Rs 400 or close to its issue price? What do you see happening in this particular stock?
A: I am expecting this momentum or party to last for about 2-4 weeks. I do not think this stock deserves a price of more than Rs 200.
A: This is a classic case of momentum or operator play which we have been witnessing in case of other recent listings. If one compares this company with Sesa Goa, which right now is ruling at P/E multiple of 5-6 times and takes EPS projections given by Resurgere�s management of about Rs 50-55 for FY09, it is ruling at a P/E multiple of 10. This is purely a trading company having fixed assets of close to Rs 2 crore on a turnover of about Rs 400-450 crore. The prices will not sustain at these levels, so one will see a sharp fall in prices maybe after two or three weeks. One cannot take a call on those things right now but it is a classic case of momentum and operator play.
Q: What can one do with regards to such companies when traded volumes, due to operator activity or otherwise, actually cross such fundamental limits?
A: One will always notice these kinds of volumes in new listings because arbitrators find it very convenient to enter and exit these stocks with a gap of about Rs 1-2. If one checks the the data, which will be released by the stock exchanges at the end of the day, one will find that many arbitrators have carried out huge volumes at a difference of Rs 1 or maybe Rs 1.5-2. When the stock is driven by momentum or operators then interest is much more in the counter and one sees huge volumes.
Q: Do you think for such issues there should be some restrictions on intra-day arbitrage? Is that something the regulator can look at?
A: I do not think it can work. The Securities and Exchange Board of India, or Sebi, can always look into that data. I don�t think that one can really restrict all these activities with artificial restrictions like those on trading volume or price movement on the first day. However, one can check the allotment pattern. When one checks the activities carried out by insiders, one can always map the culprits or operators in the counter.
Q: What is your view going forward on that stock? Will the party be over today or going forward are there further gains on this one? Do you think this will slide to sub-Rs 400 or close to its issue price? What do you see happening in this particular stock?
A: I am expecting this momentum or party to last for about 2-4 weeks. I do not think this stock deserves a price of more than Rs 200.
posted by Bramesh at
8:33 PM
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