Wednesday, November 19, 2014

BEWARE OF UPPER CIRCUIT & DOWN CIRCUIT

Hello friends,
                       Apart from the stock picks, today we are discussing about one of the most important aspects of the stock market. i.e CIRCUIT FILTERS. Most of the time Stocks hit Up or Down circuits because of the so called Operators/ Manipulators.( Not always but most of the Stocks/ Operator driven).  Now we will see how these happens in the stock market.

               Take one example of share scrip ABC, operators are following this scrip at the early stages and starts accumulating for a considerable time. They will be having more than one accounts to do the this activity. At the same time they will have a close connections with the promoters, major shareholders, HNI etc.
              At the initial stage, they will buy & sell the shares of ABC in to their accounts only to create the artificial volumes, in addition to it with the help of these promoters they will publish news driven/ important announcements/ sentiment driven news to Stock exchanges. By this time they will be having good amount of shares in their account . Once they finish accumulating the shares, they will put big order to make it up circuit. Please read carefully what happens next.

            Lets say ABC share has hit with upper circuit with 100000 shares, this is the time actually retail investors will rush in for this scrip, they also puts an open orders for the same. Assume now the total order say 110000. (10000 from retailers & 1 Lakh from Operators). Now they will change the order to say 100001, total order quantity will become 110001- as you know in market once you change the order it will be executed after executing the previous order. Now they will sell 10000 shares to retailers & this process will continue for many days. PLEASE NOTE THAT OPERATORS ARE ACTUAL SELLERS IN THE UPPER CIRCUIT.
            Once they will finish selling all their accumulated shares they will cancel the buying orders, naturally ABC stock will slide to lower circuit. At the end of the process Operators are sitting with the money & poor retailers are with stocks in their hand. (In some cases they will buy small quantity of the shares at each down circuits and once they finish buying they will put again big orders to make it again upper circuit and they will repeat the process or they will leave the counter).

Dear friends , once again please hammer this words in your mind that  OPERATORS ARE ACTUAL SELLERS IN THE UPPER CIRCUIT, RETAILERS ARE THE BUYERS.
           So dear readers don't fascinating about the Upper circuits and chase the stocks blindly, finally you will be ending up burning your hands.
            This blog is to create the awareness in the investors about the CIRCUIT FILTERS.

 

11 comments:

  1. Dear VG, good article....it is worth reading...I bought SKM EGG @131, NOW WHAT TO DO? shall i hold or sell.

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    Replies
    1. I have recommended skm egg @27.50, that time stock not hitting any circuits, after 10 days stock suddenly starts to hitting up circuits that time I have cautious about skm and updated two separate blogs and clearly mentioned that sell 50% @ 77.40, and wait 50% for cost free,now stock move to anywhere investor not lose hard earned money. Now answer to your questions,in lower circuit how you sell? Mater of two month stock jumps to 550% !!! why you brought @ 131?

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  2. Sir very good post. Its my Ist day in your blog so could not capitalize on your SKM call. Most of the retail investors are facing the same problem. Sir up to what level do you think it will slide down ? How long the lower circuit will continue ? Any idea?

    Sir I have gone through all your recommended stocks today. Most of them are good. Sir can I enter at cmp in those stock now ? Please suggest.

    Regards.

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  3. Dear VG, I bought Bharat Agri at 160. Do you think its better to hold on to this stock or shift to any other better picks? Can I take small positions in Piramal Pytho care and Shyam telecom?

    Regards,
    Jay

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    Replies
    1. Bharath agri is a pure real estate player, in India real estate sector should be pick up in coming years ,so this stock give good return in long term. Shyam Tele and piramal phythocare already recommended to sell 45% profits in just three days after recommendations.

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  4. Can you please suggest waterbase. I too made mistake of entering at higher level @ 90.

    Can I hold this stock?

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  5. Sir I entered in SKM @80 what should i do?

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  6. dear vg, thanks for this post, hope retail investor wl understand from this and in future they wl be careful, pls suggest some scripts for investment my budget is around 5 Lac.

    ReplyDelete