Educomp’s Share Price Slumps as Bears orchestrate a Mauling

Educomp appears to be a victim of Bear Market Manipulation…After Satyam,the Markets have been expecting some more companies to be exposed….So when the Daily Pioneer came out with an adverse story on Educomp and it’ Promoters,the Share price simply collapsed to a low of Rs 1375 yesterday from above Rs 2100 on January 19,2009…Check out this story on

http://www.dailypioneer.com/151227/After-Satyam-Educomp-under-scanner-for-fudging-accounts.html

The journalists have raised questions on a host of issues…one of them is that the Promoters have made a lot of money by trading in their own shares between 2006 and 2008

First and Foremost it is not illegal for a Promoter or Top Manager or Director to reduce his Holding.A M Naik,CMD of Larsen,Narayan Murthy of Infosys….they all have sold off some part of their holdings to arrange Funds that they may have needed or to balance their portfolios …it may also have been that they may have thought that the Share price had run away too much ahead of Fundamentals and so they took advantage by selling…There is nothing wrong in this,unless it is out of the Ordinary

In this Context,Educomp’s head,Shantanu Prakash has come forward on business channels and frankly answered a lot of questions…he has also lodged a complaint with the Economic Offences Wing that somebody is out to create panic for Educomp Share prices and is spreading rumours to bring the Price down

If you recall,a few months ago,ICICI Bank share Price too had tumbled overnight and MV Kamath had filed a Complaint with the Police as well as with SEBI that some sub broker had send out 30000 smses bearing adverse new of ICICI Bank…The objective was that a ‘cartel’ wanted to bring the Share Price down…SEBI investigated but reported that there was no evidence of such a wrong and illegal practice 

Interestingly Wall Street Journal just carried a topical article that warns that White Collar Crimes may jump significantly this year as economic and financial market turmoil lead many to deviate from moral and proper activities to keep up the revenue stream or make a quick buck.

It refers to a ‘Global Fraud Report’ just released by New York based Risk Consultancy Firm,Kroll Inc.It warns of unscrupulous form of short selling where brokers and traders form ‘loosely organised cartels’ to start negative rumours about a company whose shares they are betting against

What happened or is happening to Educomp may just be this !

Top FIIs are supporting Educomp and one has even set a target of Rs 4400 for it !It has recovered strongly by 15% today to Rs 1790 from a closing of Rs 1535 yesterday

Watch out for some other Company now…the List of F & O Companies may be the Pointer as short selling is facilitated in these companies…Watch their Open Interest Numbers Daily !  

5 thoughts on “Educomp’s Share Price Slumps as Bears orchestrate a Mauling

  1. No,Madhu,I don’t

    I missed the Educomp Story when Share Price was Rs 300 or so and never bought in when it surged smartly in the past two years

    Just commenting that media in it’s zeal to unearth more ‘Satyams’ should report fairly and without bias

    I’m not defending Educomp and it’s promoter in any way…but accusing them of manipulation and trading in their own shares just because they sold off some small part of their holdings is getting overzealous…a host of reputed promoters sold off part of their holdings last year to take advantage of High unprecedented prices

    Just warning those out there that bear markets are touchy and very sensitive to negative news,even if it’s a rumour…..short sellers can orchestrate winning situations by spreading such negative news which may not have any basis or substance

    Just be careful out there,especially if you’re trading in both segments…. Spot and Derivatives

    Cheers ! and thx for the very quick response

  2. Gaurav, I told that on a lighter note… Never really meant anything. Even I like Educomp’s robust business model..

    Keep up your gud work.. I jus love ur candid views !!

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