SEBI's List Left The Market 'Shell' Shocked!

Aug 11, 2017 | 04:43 PM IST

Market This Week

The market is below 10,000, yes you a heard it right. There was huge selling seen in this week especially in mid cap and small cap companies because of SEBI order on 331 shell companies and banned it for trading since 8th August. Shell company is a company which has no fundamentals present and its used for money laundering purpose. SEBI has not given a procedure for how it has picked up as shell companies because some of the companies have fundamentals and they are presenting regular numbers and filling necessary document to exchange.

On the other hand, the rising US-Korea geopolitical tension has increased the panic in the market. Increasing geopolitical tensions between USA and Korea led to a surge in prices of oil and gold. All the markets in the world have been trading in the red zone since the rise of geopolitical tension.

Movers & Shakers

Cochin shipyard has listed with 22% upside over strong fundamentals and attractive valuation. 63 Moon technologies has gained around 18% this week as the price has been trading at the strong support level and positive management commentary on insider trading. The inclusion of 331 companies as shell companies has shaken the entire market and due to that, all the major companies have seen a major profit booking in the market and especially in mid cap and small cap sector. As a result, it was down from 10% to 50% in one week like Cigniti Technologies and Prakash Steelage.

Key Market Drivers

The key negative news for this week is that SEBI's direction on shell companies. 331 companies have been banned from trading. Rising geopolitical tension in the USA and North Korea has created a fuss in the international market, if war situation arises in future then its effect would be catastrophic and the whole world market would be in trouble. In other news, some of the companies presented very good numbers this week like Eicher motors, Lal Path Lab and Natco pharma.

Event Watch

An important event is scheduled next week. Consumer Price Index (CPI) and Wholesale Price Index (WPI) numbers are coming out on 14th of August 2017. BSE and NSE are going to investigate 331 companies fundamentals and reply to SEBI on 15th August. This report would be very crucial on the domestic front as this report will decide which companies are shell companies and which are not.

Stocks To Watch

Goldstone Infratech is on the upside while Tata Motors is on the downside.

 

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