Traps for Investors
Traps for investors
1)Volume - volume is managed by circular
trading - A sells to B, B sells to C, C sells to D, D
sell to A or B or C.
There may be 15-20 accounts involved and is
done in a way to avoid SEBI noticing the same.
2)Upper Circuit
No genuine buyer will place order at upper circuit
price. No investor will sell share if the price is
locked in upper circuit.
Again circular trading to increase price.
Electrotherm Rs 79.75 ,10% up, locked in 10%
upper circuit.
Trap for greedy investor is laid.
3) Media reports
Break out , Above 30,60,200 moving days average
, signing of contract , getting sales order ,
acquiring unit etc will start pouring in once stock
has appreciated 75-100%
4)Preferential Allotment- why promoter will take
share at higher price. Just to lay a trap for
investor who thinks , price will go up to the price
of preferential allotment.
The promoter will sell away his holding acquired
in others name at much lower price then current
price.
5)Jump in quarterly profit - in one quarter
50-200% jump in profit is shown , price jacked up
, Promoters sell their share . In following or next
quarter loss is shown , the price falls.
6)Showing huge profit but carried forward loss. If
income tax ,(MAT) is not paid , the high profit is
used as a trap for investor by showing high EPS ,
low PE, high profitability.
7)Investment by FII
Why FII will invest in a Junk company.
Again funds re-routed for trapping Investors.
ABC Ltd has 100% subsidiary in Switzerland ,
Singapore or tax Haven.
ABC Ltd Advancs money to subsidiary, Subsidiary
to FII or Investor, who buys Shares of ABC Ltd
There are some other tricks to trap Investors. But
keeping above in mind will save Investors.
Checking of PE, Dividend Yield and Return on
Networth can save a lot of investors from losses.
Frwd ЁЯМ╣
1)Volume - volume is managed by circular
trading - A sells to B, B sells to C, C sells to D, D
sell to A or B or C.
There may be 15-20 accounts involved and is
done in a way to avoid SEBI noticing the same.
2)Upper Circuit
No genuine buyer will place order at upper circuit
price. No investor will sell share if the price is
locked in upper circuit.
Again circular trading to increase price.
Electrotherm Rs 79.75 ,10% up, locked in 10%
upper circuit.
Trap for greedy investor is laid.
3) Media reports
Break out , Above 30,60,200 moving days average
, signing of contract , getting sales order ,
acquiring unit etc will start pouring in once stock
has appreciated 75-100%
4)Preferential Allotment- why promoter will take
share at higher price. Just to lay a trap for
investor who thinks , price will go up to the price
of preferential allotment.
The promoter will sell away his holding acquired
in others name at much lower price then current
price.
5)Jump in quarterly profit - in one quarter
50-200% jump in profit is shown , price jacked up
, Promoters sell their share . In following or next
quarter loss is shown , the price falls.
6)Showing huge profit but carried forward loss. If
income tax ,(MAT) is not paid , the high profit is
used as a trap for investor by showing high EPS ,
low PE, high profitability.
7)Investment by FII
Why FII will invest in a Junk company.
Again funds re-routed for trapping Investors.
ABC Ltd has 100% subsidiary in Switzerland ,
Singapore or tax Haven.
ABC Ltd Advancs money to subsidiary, Subsidiary
to FII or Investor, who buys Shares of ABC Ltd
There are some other tricks to trap Investors. But
keeping above in mind will save Investors.
Checking of PE, Dividend Yield and Return on
Networth can save a lot of investors from losses.
Frwd ЁЯМ╣
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