Looks like the tale of pledged shares has played out in the Indian markets for now. Till the next time its told i.e. Markets saw a decent pullback after 2 days of nerve wrecking price erosion.
Most promoters of companies pledge their shares to financiers for meeting a variety of their needs. Nothing terrifying about it. Problem occurs when promoters are required to shell out a top up when the market value of the pledged shares falls. And if they can't, all hell breaks loose. A proper scrutiny of a company's financial health before investing helps tide over such crisis in the markets. And for people with deep pockets, these are windfall generating situations.
Stock Idea:
Mundra Port: Another stock,which has been able to maintain it price in the region of 140-150 for the past 6 months instead of going down. It is now India's 7th largest port and has handled 50m MT cargo in 2010-11. Co's target is to increase it to 80m MT in 2011-12 and 100m MT by 2012-13. This will make it the largest port in terms of cargo handling.
It has recently added another feather to its cap. It has acquired a coal terminal in Australia through an all cash deal amounting to Aus$1.829 bn.
Looks like a good growth compounder.
Disclosure : I hold the stock in my portfolio.
Happy investing
Basudev
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