Value will Protect in a Wildly Swinging Market !
How Terribly Inefficient our Stock Markets are !
The Share Price Swings in Small & Mid Caps can be equally exhilarating and devastating !…depends !
And all this happens when the Sensex and Nifty move in a very narrow range !
Down ! Down ! Down!
Look at Amtek Auto’s Crash yesterday and continuing today !…all because the Exchanges announced that it will no longer be traded in the F & O Segment
It was Rs 141.50 on August 17,2015.Yesterday August 19,2015 it crashed by nearly 40% and Rs 50 to hit a low of Rs 78 before closing at Rs 89 !
And this morning August 20,2015 it crashed another 40% to a low of Rs 50.70 before now recovering to Rs 67 levels !
So the fall in three days from a High of Rs 141.50 to a low of Rs 50.70 is 64% erosion of market cap from Rs 3100 crs to Rs 1100 crs in just one big Breath ! with High Volumes but low Delivery %….SCARY !
And this is a Company where the Promoters Dhams & Their Companies own 48.98%,FPIs like Goldman Sachs & Macquarie hold 18.83%,Domestic Institutions like LIC hold 16.47% as on June 30,2015.
There were over 46000 shareholders on this date.Spare a thought for them !…and for those who were long in F & O !
…and Spare a Curse for those Broking Houses and FPIs who recommended this Scrip !
Did not all know that the Group is struggling with over Rs 25000 crs in debt !….Wise after the Event !
Look at Stampede Capital !
Rs 650 two days ago after an all time high of Rs 800 on August 6,2015 and down on two consecutive lower circuits of 20% yesterday at Rs 494 and even today to Rs 406 on BSE !….CRAZY !…and SCARY!….just over 2700 shareholders,one being Superstar Amitabh Bacchan (entered a year and a half ago picking up One Cr shares at Rs 88 & similar at Rs 110 levels), at June 30,2015 in what is clearly a highly controlled scrip
Look at Ansal Buildwell ! Big Up & Down Swings in three days !
Clearly Insider trading Involved or can the long positions be defended as aggressive risk taking based in favourable anticipation of a Supreme Court Judgement that was announced yesterday on the Ansal Brothers for the Uphaar Cinema Hall Tragedy that took 59 lives 18 years ago in a devastating Fire !
On August 17,2015 the Share Price was Rs 123.On August 18,2015,just a day before Supreme Court Order the Price flared to Rs 148.30.Yesterday it closed up on upper circuit at Rs 163.10 ! as Supreme Court announced merely a Fine of Rs 60 crores on the Brothers and no Jail Sentence !….and today it’s on lower circuit at Rs 146.80 nearing noon !…and the rise was being justified as Market Cap just @ Rs 100 crs and land bank value worth Rs 10000 crs !
Up ! Up! Up!
Tata Elxsi was Rs 1716 two days ago.Then raced away to a 20% upper circuit day before to Rs 2137 and reached a High of Rs 2317 yesterday and is since correcting sharply to Rs 2150 levels today !…that’s a 35% up move inside days from Rs 1716 to Rs 2317 before correcting!
Many will see Great Opportunity in Inefficient Markets while Many will actually experience Fear which is the flip side of the Greed Coin….how incoherent will they sound defending and justifying a very risky selection sans any value at all !
My advice to valueless thrill riders is you guys are going to ultimately get caught or die !!!….like those fast dangerous ‘Dhoom’ Riders who assemble in Gangs on Mumbai’s Marine Drive,Worli Seaface,Bandra Reclamation late at night to race like idiots endangering not only their lives but those around them too !
Try advising those in for the Thrill in Valueless Rides to “Buy and Hold” or “Hold for the Long Term” or worse yet “Average” when Prices Fall !
Ultimately it’s Genuine Valuation that will not only Save you to Survive such Swings but convince you to invest when the Share Price is way below Value and When Markets are Boring Places to be in !
Question is what is “Value”!…and when can you actually see the Bubbly Froth not of the Champagne Variety !
What I do observe is that all four Legs of the Equity Table ~ Liquidity & Sentiment & Momentum and Valuation are being visibly impacted on continuing muted Q 1 FY 16 Earnings,Rupee fall towards Rs 66 to the US $ on the yuan devaluation effect and the half a billion US $s FPI outflow last week
My sense is that while the Volatility Dance in the Small & Midcap Space will continue to have you on an edge in the short term ,the Sensitive Indices Nifty and Sensex would move in a narrower range with a downward slant
Look for Value in the Falling Prices !
The question again arises what is “Value”!
1 thought on “Value Protects in Inefficient & Wildly Swinging Scary Stock Markets”
While there is huge selling pressure across small & mid cap segment, I am buying businesses which based on my Value estimates are now under-priced. Mis-pricing is happening primarily because of profit-booking by momentum players.
Again, a learning from Your Workshop. “Value with respect to Price”.
My focus has shifted to observing the Under Pricing of existing or potential Value.
With each fall in Sensitivity indices I am buying more and more. Instead of a typical feeling of “Fear” I have a Feeling of being closer to higher “Margin of Safety”.
A higher Margin of Safety will absorb any estimation errors (quantitative OR Qualitative) I made while estimating the Value.
In Nutshell, I have a feeling of being wiser than before.