Stocks such as
, Bhagwati Oxygen and have soared over the past two weeks. And so have the shares of Bombay Oxygen Investments, listed on BSE.
The stock has more than doubled in the space of a fortnight with the turnover surging 286 per cent in the same period and deliveries averaging 79 per cent. The gains of the stock, however, were driven solely by its name, rather than by the business it does.
Bombay Oxygen Investment used to be a supplier of oxygen, but stopped selling industrial gases over two years ago.
It is currently registered as a non-deposit taking non-bank financial company under the purview of the Reserve Bank of India (RBI) and as per its own disclosure of 2019, the company is generating revenues from its financial investments.
“It’s got pumped up as an oxygen manufacturing company dealing in industrial gases on social media. Someone desperately wants an exit,” Amit Kumar Gupta, head of portfolio management services at Adroit Financial Services, said in a tweet on Sunday.
Gupta was one of the first ones to spot the anomaly.
The episode highlights the growing power of social media platforms such as Twitter, WhatsApp and Telegram on investment and trading decisions of market participants. It also brings to light the quantum of manipulation that exists in the Indian stock market as traders and investors, especially retail, fail to do due diligence in a hurry to bag the next big multibagger.
Regulators such as the Sebi are still unable to cope with the menace of such tip-based investing which eventually ends up burning the hands of retail traders and investors.
Bombay Oxygen’s surge typifies the quirk in the domestic equity market, where a torrent of first-time investors has found making money relatively easier as one in every two BSE-listed stock doubled over the past 12 months.
Armed with zero-fee brokerage accounts and advice from emerging social media influencers, retail investors have taken the equity market by storm in India but not with its own drawbacks.
“Several institutions including the Financial Stability Board and RBI have raised concerns of an increasing disconnect of the financial markets with the real economy and the possible risk it may pose to systemic stability,” Sebi Chairman Ajay Tyagi said in a recent speech.
“This increasing disconnect is another occurrence witnessed in today’s times which possibly has no precedent before,” Tyagi said.
Whether this episode at Bombay Oxygen will nudge retail investors to do more due diligence before jumping on to a stock that was recommended on some social media platform remains to be seen, but it should prompt the regulators to bring in policies that would force stock exchanges to nip such occurrences in the bud.
