Both of the ways mentioned above are subjective: your expensive is, could be our value. There is a third way one can tell that the market does not know what it is doing. That its well-oiled machine is working too well. Too well, for its own good!
It is when truly crazy things happen, things that defy logic and want to make you eat paper.
Dewan Housing Finance Corp is one such phenomenon, a true wonder of how excess in the stock market can drive investors to make hilarious decisions.
Shares of Dewan Housing Finance Corp spiked 10 per cent on Monday after the National Company Law Tribunal accepted Piramal Group’s resolution offer for the company. That’s great news, right?
However, as per the resolution plan, the equity shareholding of the company will be written off. That means, the price of the stock will go down to zero and yet, there are participants in the market willing to pay money to just see it getting extinguished soon. If that’s not crazy, who knows what is!
Now that we have got that out of our system, let’s focus on things that do make sense like MRF.
Margins pinch
Shares of the country’s largest tyremaker fell 3 per cent after investors were disappointed by the company’s operating performance (yes, some still care about earnings!). The company reported an operating margin of 15.9 per cent as against expectations of 18 per cent because the party in the global crude oil market is killing the company’s vibe. With global brokerages predicting $80 per barrel oil price by September, things are looking ugly for MRF’s margins.
Jhunjhunwala effect
Such is the legacy of the man known in some circles as India’s Warren Buffett that every slight activity he does in the market is interpreted in a thousand ways by keen onlookers. Be it his wrangling of Titan’s management on conference calls or his entry into a stock. Not surprising then that
spurted nearly 3 per cent after the company’s disclosure showed that ace investor Rakesh Jhunjhunwala’s firm will be among a clutch of high-profile investors that will hold meetings with the top brass of the company throughout this week.
Unlock theme gathers momentum
Investors are really not in the mood of missing out on stocks that will benefit from the unlocking of the economy that is slowly underway after a devastating second wave of Covid-19. Clearly, those who missed out last year do not want a repeat. Shares of
benefitted from this frenzy as the stock surged 4.4 per cent with volumes 1,140 per cent higher than the average.
Some trains are too costly to miss, some might say!
