On 4/16/09, Jay Shah <[email protected]> wrote: > *Analysts advise caution as 737 stocks hit upper circuit > <http://www.thehindubusinessline.com/2009/04/16/stories/2009041651101000.htm> > * > > ** > > ** > > ** > > ** > > ** > > ** > > ** > > *K.S. Badri Narayanan * > > Chennai, April 15 Analysts caution investors even as 737 stocks hit the > upper circuit on the BSE on Wednesday. This is one fourth of the total > stocks that were traded on the BSE however, very few of these were from the > BSE 500. > > As against this, only 83 stocks hit the lower circuit filter. When a stock > hits the upper circuit, it means that it has reached the maximum price that > it is permitted to move in one trading day. In the upper circuit, there > would be only buyers and no sellers, with the pattern being the reverse in > the lower circuit. > > Exchanges fix the range for individual stocks according to their risk > profile. However, circuit filter does not apply to a stock if it is also > traded in the futures and options segment or is part of any index, which is > traded in the derivatives segment. > > Market participants say that this kind of moves reminds them of the frenzied > activity that took place between October 2007 and January 2008. “Every few > months one finds the market reaching a stage where insanity takes over and > investors commit the same mistake of simply buying without rational or > fundamental reasons. > > This is a stage where one has be extra cautious simply because this is > earnings season and the majority of the companies are not going to declare > quarterly results but annual results by June 30,” according to Mr Kejriwal > of KRIS Securities. > > Significance of June 30 results means the corporates would announce audited > results after the Lok Sabha results are known on May 16, Mr Kejriwal added. > > “When the market was peaking in January last year, the number of stocks > hitting the upper circuit had been on the rise. But what had happened after > that is known to every one and retail investors should not forget the lesson > they learnt from that,” said another Mumbai-based broker. > > “Look at the irony of things. On a day when Infosys gave a negative guidance > for the year 2009-10, and painted a gloomy picture for the year ahead, our > market initially reacted to the guidance, but rebounded. It gives the > feeling that only Infosys will do badly, and no other company in India,” > said Mr Kejriwal. > > However, not all are that pessimistic in the market. > > “Remain invested in good quality mid-cap stocks but don’t leverage” is the > advice from Mr V.K. Sharma of Anagram Stockbroking. > > Most of the stocks that hit the upper circuit were outside the BSE 500 > index. There were just 41 stocks from the BSE 500 that hit the upper circuit > and three stocks were from the ‘A’ group. Within the various groups of the > BSE, 499 stocks were from B and 199 stocks were from S & T groups. > > > >
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