Perils of investing in the stocks recommended by some advisory services in www.valuenotes.com:

In the last decade, there has been a spate of stock market advisory services, including the highly Inflammatory one by one  named, Anirudh Sethi of Baroda, Gujarat--though SEBI banned him later from accessing the markets and also writing about the markets. 
Most of these services claim to make you rich within a very short time from investing in the stock market. If I remember correctly then this dangerous trend  was started from 2001-02 itself when an entity named Atul Jain of Gujarat used to spam mails in Yahoo Groups (now done by Flash Stocks/ Neeta Salecha) to make  his recommended stocks move. I remember he used to choose low liquidity stocks, which used to hit continuous circuits for some days.....Now the things are far worse from there....every day, new advisory service comes up and gullible investors/trader queue to test their, "Richie quick Rich" formulae. The result is very pathetic most of the time and these fellows ultimately leave the markets in anguish. If you are suffering from Typhoid, will you get cured by taking the medicines for stomach ache...??!! Huh!! 
During the last few years I had discussed a number of stocks recommended by many agencies like Jumping Stocks (I  have seen many people "jump in pain" after buying their recommendations), 3M Team, Bulls & Bears, Dharmesh Bhatt, Kaamdhenu, Khelo India Khelo, Kuberdhan, Manu Consultant, Money Mantra, MTech Tips, Praveen Kumar, Rakesh Singhariya, Sai Trade, StockHiFi, etc.  

I have said that in many occassions that a large number of stocks recommended by them are inappropriate at the price of recommendation and people who hold their recommendations might suffer in the long run--because ultimately stock market is guided by the fundamentals. I have seen earlier Jumping Stocks charging as high as Rs.8000 per month. Many advisory services take not less than Rs.5000/month except those who run, "Forwarded Call business" (Many popular ones are like that only) or who run what I call in loose term, "Chela Calls" of some large advisory services. These people are "Chelas" or subscribers of some advisory services and they would keep forwarding the calls from those services, without much hassle. They will give you 100s of calls in a year and talk only of those calls which were able to generate returns. 

It is to be understood that in the short term sentiment might change due to lot of unwanted factors, but in the long run, a fundamentally strong company or which a strong story to tell (Ennore Coke Ltd, Premier Explosives Ltd, Sujana Metals Ltd , etc) wins the race. 

But then there are sometimes manipulation of share price of "visibly" fundamentally strong companies as well, like what is happening in Jupiter Bio Science Ltd. The company's fundamentals look good as compared to the current dismal price of Rs.32-35. But the question is: are the fundamentals real? 
If yes then why there is selling in the bourses by the GDR people or entities holding the shares in the form of  GDR. The company should disclose the names of identies who are selling......People generally sell family gold, when either the family is in distress or the price of gold has peaked out...??!! So which of the two cases are true here...??!!

The stock  of Jupiter Bio Science Ltd is getting hammered without any valid reason as far as the fundamentals mentioned on www.bseindia.com are concerned, but the company's management has not even filed a complaint either with exchanges or SEBI, which looks totally strange. In this context we can remember the case of the stock of ICICI Bank Ltd. A couple of years back when the stock was getting beaten down badly without any reason, its then  CMD, Mr.K V Kamath, jumped into action information about the price rigging in the scrip by some entities in Dalal Street. If I could remember correctly, even the media was used to the hilt by the said bank to stop manipulation of the price of the scrip by vested interest group/s. But in case of Jupiter Bio Science the things are going on for months, while the  management is feigning ignornace, as if they know nothing of the affairs.....What a pity??!! 

Switching topic let me come to the main point of discussion. Jumping Stocks recommended Nelcast Ltd (URL: http://www.valuenotes.com/valuenotes/content/contriarticles/contri66836.asp) at Rs.137-139 with a target of Rs.180. Now let me discuss a bit about the perils of investing in such recommended scrips. Moreover, their quality of English Language used for communication, mentioned on their page (www.valuenotes) needs special "medication". Let me now put my points without further delay...

(i) the current price of Nelcast Ltd is near its 52-week high price of Rs.136.80. It is always dangerous to invest in the scrips which are near their 52-week  high price. 

(ii) the December quarter (Q2FY11) result of the company as given in www.bseindia.com seems to  have some problem, which Jumping Stock copied without verifying the facts and figures. If we go through the result page then we would find that, there has been a steady increase in the total income of the company in the last few quarters, but then there is sudden jump in the Net Profit of the company from Rs.2.34 Cr to Rs.78.22 Cr in Q3FY11, which totally looks strange to me. This figure has been copied by Jumping Stocks and presented to hapless investors to make their case strong for investment in Nelcast Ltd at such a high price. Now if we dig deeper we would find that, PBT for Q3FY11 was only Rs.5 Cr and also there was  tax component of Rs.1.87 Cr so going by the general logic the net profit should have  been Rs.3.13 Cr, while it has been shown as Rs.78.22 beyond my understanding!! 

(iii) Jumping Stocks writes, "Post.....44.96 Rupees EPS Vs 1.34 Rupees in Year Ago.... ( What's More u Want )". But then the question is how can the EPS be Rs.44.96 when its PBT is only Rs.5 Cr and tax component is Rs.1.87 Cr ??!! Just call up these people and ask them.....You can quote my name also....

(iv) Then Jumping Stock writes the most dangerous thing, "Last....But Not Least................JUMPING STOCKS is Bullish in this Counter....and Awarded NELCAST As Stock of the Month....and Giving Target of 180+ in Next Few Days...........!!!" Just ask yourself: How can the shares of a company with the kind of story Nelcast Ltd has, can become Rs.180, with H1FY11 EPS of less than Rs.5 or even 9month EPS of less than Rs.5, unless it is manipulated to the hilt??!! Putting some figure by the BSE does not increase the EPS of the company..does it.??!!...What is more nerve shattering is that, instead of questioning the stock exchange for the same, Jumping Stocks is copy pasted those "seemingly erronous" data on their web-page at www.valuenotes.com. 

What I conclude therefore is that, either the company is wrong in sending the data or the BSE has put up a wrong data on their website: www.bseindia.com. But what is lamenting is that Jumping Stocks copied the same statistics without even mentioning in their page as why the figure of NET PROFIT so far away from the actual figures!! 

(v) Moreover, Jumping Stocks writes, "Promoter's........Stake is Now......More Than...70%......(And Continuously Increasing). But giving a closer scrutiny it has been found that the promoters stake has been more or less constant during the last one  year. The promoter holding was 68.71% in Q2FY10, which marginally increased to 70.12% in Q2FY11 a very minor increase of 1.41%. Moreover, the Promoters' holding in the last two quarters did not change or changed very less when compared to June, 2010 quarter. Hence this claim also looks to be hollow. 

However, people continue buying these recommended stocks in the hope of getting quick income, which is just an illusion in stock market most of the time unless  you have an access to boardroom of companies. 

When I recommend a scrip, I look at the scrip from all angles, except may be in very few cases. If the scrip tanks in the short time due to some wrong information from the sources, I ask them to average the scrip and give continuous updates on the same, like presently I am doing in case of Ambalal Sarabhai Enterprise, Kohinoor Broadcasting Corp, Vision Corp Ltd, etc. 

Though Ambalal Sarabhai Enterprise (recommended by www.hjbjcapital.com also) got suspended for trading some weeks back, I have not seen such updates by www.hbjcapital.com on their website till now.

When a stock does not do well most of these agencies, just keep mum or ask to exit the scrip and invest somewhere to make up for the loss. Or try to keep things under the carpet so that their clients do not get the real news....

But the question is: it is possible in one or two stocks out of a basket of 50 stocks and not in case of every stock one recommends. I recommend so many stocks and even put their research reports at www.sumanspeaksplus.blogspot, including this blog but some people only talk of my scrips which failed to perform in the bourses due to many factors. But I know most of those who invest in my recommended  scrips makes money over a period. For example, many pulled my legs very badly (like now they are doing in case of Kohinoor Broadcasting and Northgate Tech, though both gave profits to those who average the same at lower price) when I recommended Pondy Oxides Ltd in 2007 at Rs.24, because the stock was finding difficulty of crossing Rs.26. Many sent me mails that it was a great mistake of me of recommending Pondy Oxides and Chemicals Ltd at that price. But then in the last 3 years the stock gave 3 times return from the recommended price. Those who have averaged around Rs.18, which I told to do, could have made 4 times return in 3 years. Now also I have recommended some scrips and some have tanked except the ones manipulated by the vested interest groups. The Paid Groups are constantly told what to with those recommended scrips of mine. However, some people only want to  make money following my free blog--which is lamenting!! When are critically sick, do you take your medicines yourself or you visit a doctor for the same??!! You visit a doctor isn't it and that too a good doctor most of the times. So when your investment is not yielding the desirable returns and you are not capable of finding a route through my free service, then why NOT GO FOR PAID SERVICE??!! 

But what they do is just the opposite: they go to some highly advertised service and pay exorbittant fees losing money there also...and then blame both me and the stock market for their default. When there is "Ghost" in the medicine how can the person get cured. Hence if you genuinely want to make money from the stock market and you do not have the requisite knowledge, then either you go for the Paid Service or go for Portfolio Management Service (PMS). To get some  PREMIUM PRODUCTS you need to spend some money, isn't it....how can you expect to live in Nariman Point in Bombay and think of paying the price of the flats in Kalyan or Dombivli??!! Premium things demand premium pricing....isn't it.!!