The tepid listing of S Chand and Company on May 9 seems to be driving high net-worth individuals (HNIs) away from the stock. Brokers said, with the issue listing at Rs 707, only 5.5 per cent above its initial public offering (IPO) price of Rs 670, many HNIs beat a hasty retreat because they had borrowed money at significantly higher rates. “HNIs, expecting good listing gains, had borrowed at over 20 per cent to apply for the issue. However, the listing was weak and they quickly offloaded their stakes,” said a broker. The stock closed at Rs 622 on Friday, down seven per cent.
No price discovery for IPOs
With adequate demand for IPOs, bankers are leaving little for investors in terms of price discovery. In the last few IPOs, the average difference between lower and upper price band has been two per cent as against close to seven per cent last year. For instance, the difference in the upper and lower price band of Avenue Supermarts IPO was only Rs 1 while in case of
CL Educate it was Rs 2. "With the kind of subscription numbers IPOs are seeing, there is no need for price discovery as we are confident that the issue will be anyway subscribed at the valuation we want," said an investment banker.
Marketmen worried after YES Bank’s under-reporting
Banking sector stocks have been doing quite well in calendar year 2017. And positive moves by the government such as the Ordinance on non-performing assets and hopes that credit offtake will improve has encouraged market players to be bullish on the sector. But, the news
that YES Bank under-reported bad loans in 2015-16 has started worrying investors that some other banks may be also suffering from a similar malaise. “The BSE Bankex has been up 25 per cent since the beginning of the year. Now, it may come under some pressure because investors are unsure about other banks,” says a fund manager. Incidentally, YES Bank is the biggest loser in banking stocks over the past month, down 9 per cent.