It is a well known fact that many stocks prices on NSE/BSE are actively “managed” by operators.
Operators usually work in cartels and hold lakhs of shares of a company. They also are well-funded. And they may be evil.
If the cartel wants to corner shares, it will keep the price subdued. They will do this by actively trading in the stock and by placing sell orders until the small investors are exhausted of buying.
When small investors are exhausted of buying, the operators will step in to pick up the shares available at lower prices.
They may keep playing this game for many days until they accumulate the desired quantity.
But there is one tell-tale sign that reveals the operator’s game.
The Delivery percentage. Here’s how that works:
How to tell if a share is being cornered (Example as on 9 June 2017)
Gujarat Pipavav is a share that is currently being recommended by top broking houses and informed circles.
It is a foreign-managed company (APM Terminals, Netherlands).
There is news that it is about to be sold and in all likelihood will be acquired by JSW Infrastructure (which belongs to the Sajjan Jindal group and is yet unlisted.
Now look at its chart, and note the delivery percentage:
The delivery % is 83.41%, and a couple of days back it was hovering between 90%-97%.
This is a clear indication that the operator is keeping the stock price subdued while absorbing all the deliveries.
The reverse can be true of shares that are artificially kept high and are recommended all over the place (forums, SMSes, blogs, etc.). In these cases, the operator holds the price for a period of time but keeps unloading (sales > purchases) till he is out.
This is one way to see through operator moves. All you have to do is employ common sense while researching.
As far as Gujarat Pipavav is concerned, I feel it is a STRONG BUY.