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July 29, 2010India’s primary market for stock issues has seen a lot of junk offerings in the recent past.They have led to big losses for investors naive enough to invest in such dodgy issues with fantastically bad fundamentals.The features of such IPOs have been that
1) They have failed to get subscribed which is a blessing in disguise for investors
2) They have just managed to get subscribed wafter which they have fallen by 30-50% in a matter of weeks
3) They have been pumped up to lure in more suckers before being dumped.
Aster Silicates is one such issues that I think will follow the (3) Path which I have listed above.I had earlier reviewed Aster Silicates to be another junk offering.The issues has surprisingly gone up 81% on the day of its listing which would makes absolutely no rational sense.The only logical explanation is the small size of the issue Rs 53 crore ( $11 million) which makes it easily vulnerable to manipulation.There have been past cases of Pump and Dump like Texmo Pipes.It would not be a big surprise that Aster Silicates soon starts falling like a rock leaving small retail investors with no exit routes and huge losses.
Aster Silicates closes with 81% premium on day 1 -Moneycontrol
Huge buying was seen in shares of Aster Silicates , a manufacturer of sodium silicate. A share closed at Rs 214, a rise of 81.36% over its issue price of Rs 118 on NSE.It has touched an intraday high of Rs 241.90 and low of Rs 123.40, after opening at Rs 128.05. It has seen trading volume of 5.95 crore shares and turnover of Rs 971 crore.
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[…] its listing day closing at a stock price of Rs 199 ( offer price of Rs 118).This made me write that Aster Silicates may be a case of Pump and Dump.This form of stock price manipulation is defined by wikipedia […]