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POSTED BY ON June 16, 2011 9:02 pm COMMENTS (4)
I had came across something like this.Can anybody explain this to me in layman terms.
I know few operators who specializes in ramping up share prices of companies .This operators are learnt to be providing a kickback of up to 20% to those who arrange buyers for their counters.They are also learnt to be taking big investors for a ride under the garb of margin funding. The modus operandi? Approaching big investors with ready money, giving them 20%-30% payment (as collateral) to avail of full funding against the pledge of the shares of the counter that he ‘handles’. The provision of margin money provides the much-needed aura of genuineness to the entire operation.However, the operators seldom comes back to the financiers and, as the scrip starts hitting the lower circuit, the financiers fail to exit and are stuck with huge quantities of the stock.
It is said operators in short time make a certain stock bullish and bearish in such ways.How far this is true?
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One more thing to remember, this kind of “stock manipulation” is easier to do in smaller relatively unknown companies’ stocks.
This is not to imply that large-cap stocks cannot be manipulated and all small cap stocks are manipulated.
you can also go through this article.
http://greenworldinvestor.com/2011/05/07/how-to-invest-in-the-india-stock-market-where-managment-quality-is-a-choice-between-bad-and-ugly/
thnks a lot Ramesh
ok
Let me explain each part in simple terms
1. I know few operators who specializes in ramping up share prices of companies .
This means that there are people in stock markets who can do various things to increase or decrease the share prices unnaturally using some tactics .
2. This operators are learnt to be providing a kickback of up to 20% to those who arrange buyers for their counters.
This means that some people are ready to give 20% commissions to those people who can bring customers , Like If I convince you to invest in stock market through a person called ABC , and if you invest 1 lac , they will give me 20,000
3. They are also learnt to be taking big investors for a ride under the garb of margin funding.
This means that these operators are able to convince big investors to do margin trading or leverage their positions , what it means is that by investing a small margin money you can control big amount of stocks , this is riskY !
4. The modus operandi? Approaching big investors with ready money, giving them 20%-30% payment (as collateral) to avail of full funding against the pledge of the shares of the counter that he ‘handles’.
Its like there operators approach those peopel who have a lot of money , they are given all the facilties which makes them interested in their servicves .
5. The provision of margin money provides the much-needed aura of genuineness to the entire operation.However, the operators seldom comes back to the financiers and, as the scrip starts hitting the lower circuit, the financiers fail to exit and are stuck with huge quantities of the stock.
This means that this tactic is very attractive , as big poeple can buy Rs 100 worth of stocks only with Rs 10 or Rs 20 and this gives them a feeling that they can make a lot of profit by small investment , imagine the stock going up from 100 to 120 , but a person has only invested Rs 20 (margin) , so he makes Rs 40 in total by investing 20 ,.
But once stock coming down , then all the hell breaks looks and these operators never come back to help the big investrors .
MANISH
Thnks a lot Manish