Operators driven stocks are the type of stocks which are controlled by the people who manipulate the stock price according to their will.
Even in the index companies, you can find these stocks.
So it is very important to know, which stocks are operator driven and which are not.
1) watch out for small companies
It is difficult for operators to manipulate the stocks of large-cap companies unless they are connected with the promoters in the deal.
They mostly pick small cap or mid cap industries.
So it will be safer for investors to invest in large-cap industries.
2) Delivery percentage
If the stock price is going higher, but the delivery percentage is low, then there is a lot of trading activity going on.
It does not mean it is operator driven but because the long-term investors are not interested in it, you should avoid these scrips.
3) sharp movements
If you are an investor then you have observed the sharp movements, gap up or gap down movements in some stocks.
It’s ok if there is an event or news, but there are a lot of stocks which moves up to 10 % either up or down casually in a single day.
I am not going to take the names of the stocks, you find it yourself.
4) These scrips don’t obey the fundamentals of the company.
When you do the fundamental analysis for a stock, you would find a huge difference in P/E ratio, Earnings per share, etc with the stock price.
So there is a higher possibility that these stocks are operator driven.
5) find the history of the stock
Scrips repeat their nature, so does the operators, they will manipulate the stock as soon as they get the chance.
Study the previous charts of the stock, then you will come to know the stock’s nature.
6) go after big investors
I am not telling you to copy the big names such as mutual funds, foreign investors, etc, but to know which stocks they are avoiding.
As a retail investor, we have less knowledge than the big investors.
However, they also can do mistakes.
For example, a lot of mutual funds had invested in Punjab national bank before the loan fraud.
7.) These stocks don’t follow technical analysis
I have lost a lot of money in this mud, bro. These stocks don’t follow any pattern, they can go up or down without any reason.
8.) The promoters holding are low
Even though there are a lot of incidents happened where promoters indulge in the manipulation.
However, mostly manipulative activities are seen in low promoter holding stocks.
9.) high volatility
Here you will find high movements in stocks, you will see very high green and red candles.
High volatility clearly shows that the stock is not good for investment, it may be good for traders for quick returns but remember you can also wipe out your capital by trading in it.
Conclusion
Retail investors are always victims of the operators because they are lured by quick returns by looking at the highly moving stock prices.
You may earn money a few times because of your luck but your losses will be much bigger.
Avoid these scrips and move to fundamentally strong ones where there will be fewer chances of losing your money.
I have explained this topic in simple terms however it is quite complex.
Read: A beginners guide to Technical Analysis
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