Penny stocks seize up
Bombay Stock Exchange shifts 127 stocks to T group or trade-to-trade segment, report MC Vaijayanthi & Vyas Mohan.Updated: Jan 08, 2008 22:19 IST
The Sensex opened higher and galloped into 21,000 territory on Tuesday with banking stocks and index heavyweight Reliance Industries sweeping up substantial gains. However, the Sensex could not hold on to its gains and closed just 42.47 points higher at 20,855.12.
Credit Suisse, in a report said their year-end target for Sensex is 23,000, driven by foreign fund inflows. Citigroup and Deutsche Bank, too, expect the Sensex to continue its winning streak with targets of 25,050 and 23,000, respectively.
"Expectations of good third-quarter results and contributions from shares in the banking, energy and metal sectors were the major drivers of the rally. Further, the mutual fund industry, which mopped up around $2 billion over the last two months through new fund offerings, has started deploying these funds. The retail risk appetite has also gone up with mid-cap stocks delivering good returns," said Gopal Agarwal, Senior Fund Manager, Mirae Asset Global Investments.
But the main action was in the mid-and small-cap segments as rumours of suspension of some small-cap stocks for non-compliance of listing agreement triggered a selloff. The BSE mid-cap and small-cap indices fell by 2.3 and 3.3 per cent, respectively, after having gained consistently in the last few weeks.
"Penny stocks were beaten down today," said a member of Bombay Stock Exchange. The BSE, in its notice to members, said it has shifted 127 stocks to the T Group with effect from January 11 and 21 companies to the TS segment. This move affected sentiment, leading to 797 stocks hitting the lower circuit on Tuesday.
Trading in T group means settlement is on gross basis — one has to compulsorily deliver the stock — and the circuit filter for the stocks in the group is 5 per cent.