The number of stocks trading below their paid-up values is increasing rapidly after the Bombay Stock Exchange Sensex corrected 44 per cent from its all-time high.
Now, 609 out of the 2,827 actively-traded stocks are quoting below their paid-up values against only 192 on January 8, 2008, when the Sensex closed at an all-time high of 20,873.33. The Sensex on Tuesday closed at a two-year low of 11,695.
The number of stocks trading below their paid-up values has increased almost three times in last nine months. Currently, 22 per cent of the actively-traded stocks are quoting below their face values against 6 per cent on January 8. Of these 609 stocks, 393 (65 per cent) belonged to the B group, while 101 were from the T group, 57 from Z group, 54 from S group and the remaining four - Gajara Bevel Gears, Venlon Enterprises, Southern Ispat and Biopac India - from the TS group of BSE.
More than half of the penny stocks had eroded the investor's wealth faster than large cap stocks. The aggregate market wealth of the 609 stocks declined by 75 per cent from their January 8 levels. Therefore, in the last nine months, the investors in these stocks have seen a value erosion of Rs 18,190 crore (from Rs 24,197 crore to Rs 6,007 crore).
These firms had seen a sharp rise in their market prices between July 9, 2007 and January 8, 2008. The aggregate market capitalisation of these stocks had appreciated by 108 per cent as compared to 39 per cent rise in the Sensex during the period.
Out of the 609 stocks, 168 are currently discounted more than 75 per cent and 322 others are in the range of 50 per cent to 75 per cent from their January 8 levels. Of these, 151 stocks are quoting at their two-year lows.
These stocks include Ashco Industries, GV Films, FGP, Ashima, Escorts Finance, Torrent Gujarat Biotech, Uniply and NRC. Lloyds Finance, Nicco Uco Alliance, Pennar Aluminum, Premium Capital Market, MTZ Polyfilms and Hotline Glass, all Rs 10 paid-up shares, traded below Rs 2.
The market price of Minal Engineering fell below its face value to Rs 7.15. The stock declined by 93 per cent from Rs 95 on January 8. Ventura Textiles declined from Rs 70.05 to Rs 9.44, Rich Capital from 49.45 to Rs 6.60, Chandni Textiles from Rs 26.47 to Rs 3.50 and Pal Credit from Rs 20.85 to Rs 2.59.