The Great Indian Stock Market Circus!!

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The coming of novice retail investors in the Indian Stock Market has just made upside down changes in the market. After outbreak of corona virus pandemic in 2020, there is a large increase in the number of retail investors and they have increased the liquidity in the market. Due to these novice investors penny stocks gave a yield of 1900% in past six months more than that of big blue chip companies like Adani Group which gave a return of 175% in last six months. The thing to watch out for in these penny stocks is that they have no strong income, inadequate employees and negative growth rate but still their prices hiked at an unprecedent rate. We can say that they have no fundamentals backing their rise in prices. This increase is due to large inflow of liquidity in these penny stocks by these investors as in penny stocks putting small amount of money can also yield high returns. There are chances of stock manipulation in these cases.

We will talk about some of the cases that will astonish you:

Case 1: Proseed India: This company is going through bankruptcy case but still its share hiked 20 times of their value in past six months. On 5 July its share price was 7.66 rupees but in January 2021 its price was only 38 paise.

Case 2: Zenco Projects: This company had income of 13.90 lakh rupees and 18000 rupees profit with only 8 employees in 2019-20. But still it showed 1342.2% increase in their share prices.

Case 3: Greencrest Financials: It showed profits of 47 lakh rupees and its share price increased by 14.34 times. Its price on 5 July was 7.17 rupees while its price in January 2021 was only 50 paise.

Case 4: Laxmi Automatic: Its revenue was 10.2 crores rupees in 2020-21 and its profit was 2.54 crores rupees but it showed a hike 1332.4% in its share price,

Experts say that these companies' valuation and its fundamental doesn't match and investors should keep a distance from these companies as their share prices' show a roller coaster situation in which the fast they show increase in prices the double the speed they will fall.

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