Illiquid stocks become top gainers

shan · 1 Illiquid stocks become top gainers Fri May 06, 2011 1:02 am

shan

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The highly illiquid stocks which represent less than 10 million of issued shares were seen gaining heavily in the market in the past couple of days, in terms of price, market analysts said.

Despite all hot stocks including blue chips falling with red signals on Wednesday, market sentiments lifted illiquid stocks such as Miramar Beach (MIRA) to close at Rs.513.40 (up 20.09%), HDFC to close at Rs.1640 (up 15.27%), Beruwela Walk Inn (BINN) to close at Rs.289.60 (up 9.99%) , Huejay International Investments (HUEJ) to close at Rs.243.80 (rose 9.97%) and Eastern Merchants Plc (EMER) to close at 1142.40 (up 9.21%).

The trend continued yesterday too with illiquid Singalanka Standard Chemicals Plc (SING) gaining 49.99% to close at Rs.1350, while Serendib Land Plc (SLND) closing at Rs.2400 (up 41.59%).

Radiant Gems International (RGEM) closing at Rs.107.10 (up 40.37%, Alufab PLC (ALUF) up closing at Rs.144.80 (up 37.38%), and On’ally Holdings (ONAL) closing at Rs.101.50 (up 28.48%).

Industry analysts forecast given the recent increase of share capital of nearly 80% of companies by way of splits, capitalization of reserves and rights; market is now poised to boom with brokers and analysts pointing investors to go for highly illiquid shares with no fundamentals.

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Jana · 2 Re: Illiquid stocks become top gainers Fri May 06, 2011 1:48 am

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Thats the one I always saying... Watch and do very carefully...

Still some more illiquid stock are there they will run very soon..(SINI , ASPH, ASHA, SIL, UAL also but UAL is the best fundementals stock ) but here If I say like that then all are against to my word.. anyway just I want to make money I don't follow the fundamentals..

When I follow the fundamentals I made huge loss.. now at least I will make some money..

not for long time just for few months .. then I will back to good stocks. ( may be long term)

Monster · 3 Re: Illiquid stocks become top gainers Fri May 06, 2011 2:32 am

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Jana wrote:
When I follow the fundamentals I made huge loss.. now at least I will make some money..

Jana, when you loose in fundamentals, you may recover it soon if you can hold it. Because it has fundamentals, it has value. But when you loose in illiquid shares which has no value, it may take long long time to recover. Some times you may not to recover at all. That's why these kind of shares should trade at discounted price.

Basically I don't chase these illiquid shares, which has no value. For me, it's more like gambling. In my theory investment is not a gambling. Smile

.

But it's your money. Profit or loss. It's your decision.

Sure N Shot · 4 Re: Illiquid stocks become top gainers Fri May 06, 2011 2:50 am

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Dear Members, How about REG? only 2 million at CDS. It can get airborne at anytime like SING (all time high Rs. 4090) because REG is fundamentally very strong. Thanks. BR !

Monster · 5 Re: Illiquid stocks become top gainers Fri May 06, 2011 3:05 am

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Sure N Shot wrote:Dear Members, How about REG? only 2 million at CDS. It can get airborne at anytime like SING (all time high Rs. 4090) because REG is fundamentally very strong. Thanks. BR !

It's fundamentally good share. I had this share in my portfolio some time back and had a decent profit. Nearly 2 million shares in CDS.

For your information, smallville has done a analysis on this,
http://forum.srilankaequity.com/t1745-reg-a-value-analysis

Jana · 6 Re: Illiquid stocks become top gainers Fri May 06, 2011 11:01 am

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Thanks monster , I know .. but thas why i mentioned first in first out and very quick sale ... don't keep with us even more than two three days...

but anyway as you said if it is loose then we can't recover in illiquid stock thats right

BenZ · 7 Re: Illiquid stocks become top gainers Fri May 06, 2011 11:47 am

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ALUF is also having very low quantity in CDS like 260,000. yesterday got caught to the price band now there is no sellers.

Price band is supporting for gamblers very well and SEC should reconsider the price band now.

Anyway for quick cash, illiquid shares became so popular in these days....

mushrif.m@gmail.com · 8 Re: Illiquid stocks become top gainers Fri May 06, 2011 10:52 pm

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I am Mshrif and i am very new to stock exchange. an any one let me know which shares are illiquid shares?

Monster · 9 Re: Illiquid stocks become top gainers Fri May 06, 2011 11:04 pm

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mushrif.m@gmail.com wrote:I am Mshrif and i am very new to stock exchange. an any one let me know which shares are illiquid shares?

@mushrif
If you are new to the stock market, refrain from investing/trading on illiquid shares. Illiquid shares has high risk. Most of the illiquid shares are untouchable (Currently trading on high price). You may loose your hard earned money. Better to monitor the share market for some time and invest on fundamentally strong shares.

milanka · 10 Re: Illiquid stocks become top gainers Fri May 06, 2011 11:27 pm

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mushrif.m@gmail.com wrote:I am Mshrif and i am very new to stock exchange. an any one let me know which shares are illiquid shares?

ALUF is one of them. But I may not recommend it or any other illiquid shares. Because there are Gamblers and manipulators. To prove it refer the following note from Benz.

Benz wrote:Price band is supporting for gamblers very well...

So think about these facts. Anyway you have no restriction . You may decide to proceed ! But think twice before you do that..

Noted the Comments by Monster with a + .

Antonym · 11 Be Cautious With Illiquid Stocks Fri May 06, 2011 11:32 pm

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Trading Liquidity refers to the ease with which you can buy or sell a stock at or near the current market price.

Highly LIQUID stocks have two features: (1) Many shares, totaling a significant rupee amount trade each day. (2) A significant number of shares can be bought or sold at any given time without driving the price up or down.

A highly liquid stock has a narrow "bid-ask spread". For example if the current bid price on a liquid stock is Rs 100.00 then the asking price (the lowest price at which a seller will sell) may be Rs 100.50 or Rs 101.00. If the stock is ILLIQUID, then the offer price could be Rs 105.00 or more.

If a stock is very liquid then you can sell it at any time for the market offered price, which will almost always be very close to the last price at which the stock traded.

For an illiquid stock, the concept of a market price has much less meaning. If an illiquid stock last traded a few shares at Rs 12.00, that does not mean that you could sell 10,000 shares for anything close to that price. If the shares are illiquid, there may be no offers to buy at anything close to Rs 12.00.

While holding an illiquid stock, you will typically experience great volatility in value. It may not be unusual for the trading price to fluctuate by 20% or more on a daily basis. And you may not be able to sell your holding without driving the market significantly lower.

Illiquid stocks are highly unsuitable for quick trading strategies. You should only buy such a stock if you are comfortable with holding it for several years.

All trades of illiquid stocks require caution. Orders to buy or sell at the market should never be used. Rather, limit orders should be used. Patience will usually be rewarded with a lower purchase or a higher selling price.

The liquidity of a stock can be judged by the daily trading volume, the current bid-ask spread and by the depth of the market.

The depth of the market shows how many shares are bid to be purchased at different prices. For example there may be 200 shares bid to purchase at Rs 12.00, 1,000 shares wanted at Rs 11.00 and 5,000 shares wanted at Rs 5.00. This would indicate lack of liquidity; if you sell at the market, you would get Rs 12.00 for the first 200 shares and Rs 11.00 for the next 1,000 but only Rs 5.00 for any additional shares. And this scenario is realistic for a highly illiquid share. Similarly, there may be 200 shares offered for sale at Rs 13, 1,000 at Rs 14 and 5,000 at Rs 20. In this case, the buyers and sellers are far apart and we would expect few trades. However, an inexperienced buyer or seller who enters a large order to by or sell at the market could "get burned" by this lack of liquidity.

Source: Shawn Allen, InvestorsFriend Inc. (Edited)

milanka · 12 Re: Illiquid stocks become top gainers Fri May 06, 2011 11:49 pm

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Antonym wrote: However, an inexperienced buyer or seller who enters a large order to by or sell at the market could "get burned" by this lack of liquidity.
Source: Shawn Allen, InvestorsFriend Inc. (Edited)

Very nicely explained Antonym.