Heard on the Street: SMS frenzy lifts Clarus Finance

A few minutes after market opened on Friday, many mobile phones buzzed with an SMS containing a recommendation to buy a small-cap NBFC stock Clarus Finance & Securities. The SMS may have surprised many, given Sebi’s restrictions on circulating recommendations. But it had the kind of impact on the price that all those involved in sending the ‘tip’ must have anticipated.

Clarus Finance & Securities shares rose 4.5% to touch the intra-day high of Rs255.7 around which level there was the frenzied activity in the counter. Soon after, the stock tumbled to hit the 20% lower circuit at Rs195.8 at which level it closed on the BSE. The early hour wild swings led to suspicion among brokers about involvement of manipulative elements in the trading.

Some operators would have used the early gains to exit positions even while causing capital loss to small investors who found themselves trapped at the lower circuit, according to brokers. Hyper activity in the counter was also reflected in huge volumes of 22.6 lakh shares compared with the twoweek average of 1.5 lakh shares traded on the BSE.

Contributed by Harish Rao