Zero Revenue Companies Increase in Share (YTD)
Transglobe Foods Ltd. 4,357%
Shree Precoated Steels Limited 1,331%
Integra Garments and Textiles Ltd. 817%
Ratan India Infrastructure Limited 442%
Tirupati Tires Ltd. 303%
Transglobe Foods makes fruit jam. This year, the company’s stock has given a bumper return of 4,300 per cent. Similarly, real estate company Shree Precoated Steel has also gained 1,331 percent. In Integra Garments and Textiles Limited, 817 percent, Rattan India Infrastructure Limited 442 percent and Tirupati Tires Limited were up 303 percent. The earnings of these companies are nothing in the current financial year.
Risky investment worries
Concerns are also rising with such risky investment as sudden profit booking in these stocks can cause big losses to traders. This may also affect the current market boom. In fact, after the lockdown started, a large number of new investors have entered the market. Because of this, the scope of the market is increasing. Similar situation was seen in American markets as well.
Avoid small stocks
According to Rohit Vohra, fund manager of Singapore’s Smartson Capital, the investment of retail investors has led to a rise in small stocks, which has increased the risk as well as the Concern. Investors should invest in quality stocks only and should avoid investing in smallcap now.
Like some other Asian countries, companies with zero revenue in India can remain listed on the stock market as long as they fulfill certain conditions related to net worth and financial performance. Currently, 450 such companies are listed on the stock market in South Asian countries.
Recovery after decline
There was a big sell in the stock market when the coronavirus started. After this there has been a strong recovery in the Indian market. All the big and small stocks have shown strong momentum. The BSE Smallcap index has risen 70 per cent since the March lows. In comparison, the Sensex has gained 50 per cent. The rise in smallcap stocks has attracted new traders.
Investors increased after March
According to G Chokkalingam, Founder and CEO of Economics Research and Advisory, it is time for profit-booking as retail investors are buying penny shares blindly. Retail investors are buying anything without looking at earnings, EBIDTA, PE ratio. According to CDSL, 28 lakh new retail accounts have been associated with the Indian stock market since March.
Investors be cautious
According to Bloomberg data, the Indian stock market capitalization has increased by $ 770 billion since the March lows. However, this is not just due to domestic and retail investors. India is one of the markets where foreign investors have been buyers. Investors need to be careful. Talking to Bloomberg, the top hedge fund of the Indian market, True Beacon, said that the market has gone far ahead and due to this they have reduced the bets of the boom. It has advised investors to stay with the big stocks.
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