Sucheta Dalal :Vikas WSP: Operators continue to play their games while SEBI sleeps?
Sucheta Dalal

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Vikas WSP: Operators continue to play their games while SEBI sleeps?  

May 8, 2012

A recent research report reveals a possible attempt to push the price of Vikas WSP. SEBI which should have the institutional memory of rampant price rigging in this scrip by a scam-tainted top broking house in the late ‘90s, remains unconcerned

Moneylife Digital Team

A research report, rather a shameless 'promo' report, doing the rounds on the Internet calls Vikas WSP a "slumdog millionaire stock"-driven by guar demand, a wonder agricultural produce that is now being used as an ingredient for shale gas exploration. A decade ago, guar gum was put out as being of the key ingredients used in drilling for crude oil. The stock then fell from Rs1,500 to a few rupees before getting delisted. Such reports/promos are produced when satta operators want to push the stock up and suck retail investors in. Once this promo was flashed, volumes spiked.

In line with the market, the stock has now been trending down, hitting a couple of lower circuits on the way, to Rs58.15 after the stock had skyrocketed from Rs18.05 to a high of Rs74.25, a 311% jump in a matter of months. On the way down the stock has alternately hit upper and lower circuit filters. This is not a normal price movement that should have alerted the market regulator.

Presumably to support the prices, the company had announced, on Bombay Stock Exchange (BSE), on 30 April 2012, that it has started building a new plant on 28 April 2012 at Jodhpur (Boronada Industrial Area). Its annual production capacity would be 38,400 metric tonne and would generate an export turnover of Rs4,608 crore. This astounding claim should have been investigated by BSE but then the stock exchange is the first line of regulator only in name. What is pertinent to note over here is that this very forward looking information was mentioned in the 'promo', well in advance, before Vikas WSP made the official announcement on the exchange. The 'promo' report was distributed in beginning of April.

Earlier this year, guar futures were banned by commodity exchanges acting on the behest of the Forward Market Commission (FMC) on allegations of massive price rigging. According to media sources, the FMC had submitted an interim report to the ministry of consumer affairs. Vikas WSP has issued a denial, filing an update on BSE, stating that it was not blamed by the FMC for price rigging in guar futures. The announcement even made a statement to pacify shareholders by saying that it does only physical business and physical export. It concluded that it had 'nothing' to do with FMC enquiry.

We had earlier written about the company's meteoric rise in its stock price on 13 April 2012. The same can be accessed here:
Infamous Vikas WSP being manipulated again while SEBI sleeps?

But since the market regulator has decided to continue with its policy of see no evil, read no evil, operators in Vikas WSP will continue to have a field day


-- Sucheta Dalal