Market Watch

Prabhu Finance: Does shortage always means the best !

Published by Octron on September 7, 2008

You remember standing in long queues for pertrol for hours and getting atmost 5 Litres. And there was a time when you could easily get enough of petrol and there wasn’t a person in a line. Pumps people were eagerly waiting to fill up full tanks.

Does shortage means always the best ?

If you have been following scrip price of Prabhu Finance Limited, then you will notice the price has always reached circuit break everyday. Since day one, with starting price Rs. 490, it has always increased 9.99% each day and within just one week today (07 September 2008) its standing at Rs. 865.

The shortage of Prabhu Shares is obviously due to people who holds its scrips are waiting eagerly to cash it for big. Thats why you can see NOT MORE THAN 60 scrips per day in whole day transaction. You can clearly see as DEMAND is high and supply is minimum, price automatically increases rapidly.

Well, that is basic law of market economics.

Yes, that is but if there was substantial amount of scrips. If you look into daily trading floor sheets of PRFL, you can see there is always one broker who is selling its scrips (Broker No. EIGHT) with the rate of 10 scrips in a transaction and sells not more than 50 – 60 scrips per day (except 31st Aug 08).

Prabhu Finance Company Limited (PRFL) Last 90 Days Trading
S.No.	Date	Total Transactions	Total Traded Shares	Total Traded Amount	Max. Price	Min. Price	Close Price
1	2008-09-07	5	50	41,690	865	802	865
2	2008-09-04	5	50	37,920	787	730	787
3	2008-09-03	5	50	34,500	716	664	716
4	2008-09-02	5	50	31,350	651	603	651
5	2008-09-01	5	50	28,510	592	549	592
6	2008-08-31	13	2,850	1,543,440	548	539	539
7	2008-08-28	5	50	25,910	538	499	538
8	2008-08-27	2	20	9,710	490	481	490
Grand Total		45	3,170	1,753,030

This clearly shows that someone is trying to play same NTC game to rise the price of the scrips beyond its book value and once it hits virtual ceiling drop it down like falling snow by flowing the market with heavy number of scrips to bring it down to bottom.

So, shortage DOES NOT ALWAYS mean the best. First get the knowledge whether the shortage is real one or just manipulative one. Never just glace the daily price of stock and its difference from yesterday. Keep the track of it.

Also, before going for any scrip first get the basics of finance. Learn all financial information about the company. Its book value, EPS, P/E, etc.

As NEPSE is pretty volatile, so you can’t pin point exact price of a scrip at particular time, but you can definitely get ball park number from company’s economic condition, relative comparision and other stuff.

Rising doesn’t always mean the GOOD !

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