The analyst pointed to promoter stake sales, a fire-hit plant, and heavy intraday churn as warning signs for retail investors.
Shares of Sigachi Industries soared 42% over two sessions this week, drawing attention from traders after a sudden burst in volumes.
Fundamentals Look Decent, But Red Flags Remain
SEBI-registered analyst Sumesh Guleria said the company appears decent on paper, noting its debt-free status, consistent margins, export-heavy revenues, and a P/E ratio of about 22.
However, he highlighted concerns as well: the managing director has been gradually reducing his stake, and a fire at the Hyderabad plant, which contributes 20% of revenue, is expected to weigh on short-term results.
Volume Spike Driven By Intraday Trading
Despite these challenges, the stock jumped sharply. Guleria said Sigachi’s average trading volume in recent weeks was around 25 lakh shares a day, with a 40% delivery rate.
On Sept. 11, however, volumes spiked to 993 lakh shares with just 12% delivery, and on Sept. 12, to 1,924 lakh shares with 10% delivery.
“This clearly points to heavy intraday trading, not delivery-based accumulation,” he said, adding that several known trading firms appeared on both the buy and sell lists the same day.
Guleria cautioned that such trading patterns often spark retail buying fueled by social media buzz and the fear-of-missing-out (FOMO), leaving smaller investors exposed.
Technical Picture Points To Cooling Off
On the charts, Guleria noted that the stock hit resistance at weekly EMA levels after the surge and has already started cooling off.
“In my experience, when a stock is in a broader downtrend and gives a sudden sharp move, it often either consolidates or corrects further,” he said.
What Is The Retail Mood?
Guleria cautioned that such trading patterns often spark retail buying fueled by social media buzz and FOMO, leaving smaller investors exposed.
His message to retail investors was clear: Don’t buy stocks under FOMO — sometimes there can be traps also, especially if someone is a small retail investor.
On Stocktwits, retail sentiment was ‘bullish’ amid ‘high’ message volume.
Sigachi’s stock has declined 13.3% so far in 2025.
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