Heard on the street: Speculators crowd VIP counter on hopes of gains from oil slip

Shares of apparel and suitcase maker VIP Industries rose to a new high driven by hopes of improvement in margins due to a fall in crude oil prices and the consequent decline in plastic prices.

Plastic, a derivative of petroleum, is the main raw material for the company, which makes a wide range of soft luggage and travel kits.

On Tuesday, the stock climbed over 3% to Rs 938.5 intra-day, before ending 1.6% up at Rs 924.5 on the BSE. According to analysts, plastic prices have come down 15-18% due to a fall in crude prices over the past two weeks. Softening of the prices is expected to boost the company’s margins, they said.

The stock has gained over 15% in the past one week. Apart from fundamental reasons, some brokers also attributed the possibility of a leading stock market investor, who is also one of major shareholders of the company, actively participating in the trading.

The trading pattern in the past two days, however, showed that the gains have largely been speculative with a small percentage of the traded quantity having been delivered in the market.

On Tuesday, only 4.5% of volumes in the VIP counter actually resulted in deliveries on the BSE.