The stock closed 68% up. Is there more to the stock’s phenomenal debut?
Mumbai-based stainless steel product manufacturer Prakash Steelage Ltd (PSL) made a powerful debut today, with the stock surging 90% over its listing price at one point in the day. More significantly, the stock's traded value for the day was 10 times its market capitalisation! This only raises suspicion of possible price manipulation and insider trading in the scrip.
The stock opened at an 8% premium to its offer price on the Bombay Stock Exchange (BSE) at Rs118.55. The scrip later touched a high of Rs201.90. The company had offered the shares at Rs110 (at the higher price band). At market closing, the stock closed at Rs187.95 on the BSE. On the National Stock Exchange (NSE), the stock opened at a premium of 11% at Rs122. The turnover stood at Rs925.30 crore with total traded quantity of 6.16 crore shares. The stock was trading at Rs184.90 on the NSE after hitting a high of Rs200.
The IPO was subscribed 4.53 times while the retail investor quota was subscribed at 6.62 times. The company had floated 62.50 lakh shares.
High trading volumes and price manipulation on the first day of listing has been the focus of discussions recently, with the regulator, Securities and Exchange Board of India (SEBI), promising to take steps to prevent it. Clearly, such manipulation continues unabated.
In a similar case of suspected stock manipulation, the shares of Emami Infrastructure Ltd, the demerged realty arm of FMCG major Emami Ltd had opened at a whopping Rs598.80 on the NSE on 28th July, which plunged to Rs86 in just an hour's time. (See: http://www.moneylife.in/article/8/7649.html). On the BSE, the stock opened at Rs250, hitting a high of Rs293 and then slipped to a low of Rs86. The stock closed at Rs101.7 on the BSE and at Rs103.7 on the NSE.
The anomaly of the opening price on both the exchanges sparked suspicions of manipulation. The market regulator SEBI then got into action by seeking information from the two exchanges about this glitch.
Mumbai: The country's largest lender State Bank of India (SBI) says it does not plan any hike in its lending and deposit rates in the near-term as the liquidity situation is evolving in the right direction, reports PTI.
"Till September, there will be no increase in our deposit rates," SBI chairman O P Bhatt said today on the sidelines of a CII-organised conference.
There are no plans to hike its newly-introduced base rate or its lending rates as well in the "near-term", Mr Bhatt said.
"The liquidity in the system is not as much as it used to be...but that is not to say that funds are not available to banks — they are available," Mr Bhatt said.
However, adding a caveat, he said that there could be pressure on liquidity as advanced tax payments start in September.
On fund-raising by State Bank of Mysore, Mr Bhatt said that the bank planned to raise around Rs500 crore by end-this year.
The merger of State Bank of Indore with SBI, which will formally happen tomorrow will be "absolutely smooth", especially, considering SBI's prior experience at amalgamating with sister banks that started with State Bank of Saurashtra last year, he said.
The move will escalate compliance burden on AMCs who see no value addition to investors
Market regulator Securities and Exchange Board of India's (SEBI) intention to mandatorily list all mutual fund schemes has received widespread flak from the industry. According to industry players speaking to Moneylife on the condition of anonymity, listing fund units on the stock exchanges will not provide any value addition to investors but will only burden them with additional compliance requirements. They complain that they are already inundated with excessive compliance work after the sweeping changes brought in by the regulator over the past one year.
Partly due to such frequent and extensive changes, equity mutual fund schemes have witnessed Rs11,560 crore of redemption since the regulator abolished entry loads in August 2009. Since November 2009, the industry has lost a whopping 8.33 lakh equity folios till July 2010.
In a move to counteract the sudden fall in mutual fund inflows, the regulator allowed trading of fund units on the stock exchanges. National Stock Exchange (NSE) started its online trading platform for MFs on 30 November 2009 and the Bombay Stock Exchange (BSE) launched its BSE StAR MF platform on 4 December 2009. However, the volumes have been meagre so far. In July 2010, the NSE recorded 2,340 transactions with Rs20.65 crore of net inflows.
Last week, the regulator asked fund houses to facilitate smoother transfer of mutual fund units between two demat accounts. This too is going to increase the cost for fund houses without any material benefit to investors. Moneylife had earlier reported on how the regulator was seeking bank-sponsored mutual funds' help to boost trading volumes on the exchanges which received a tepid response from bankers. (Read here: http://www.moneylife.in/article/4/5752.html) and here (http://www.moneylife.in/article/81/5841.html).
Now in another forced measure, the regulator has asked all fund companies to compulsorily list their units on the exchanges. "The regulator has sought feedback from us. We will be replying in a few days. The cost of listing mutual fund units is less compared to stocks. All our equity schemes are already listed. We are sorting out the operational issues. The compliance department will have a tough time ahead," said an official who did not wish to be named.
In order to list units on the NSE, mutual funds with a corpus up to Rs100 crore have to cough up Rs16,000 initially; if the tenure of the scheme is more than six months, the listing fee as applicable for multiples of six months will be levied. Similarly, the initial listing fee for a scheme whose corpus exceeds Rs1,000 crore is Rs1.25 lakh.
Unlike MFs, companies have to shell out Rs25,000 as initial listing fees and have to incur an additional annual listing fee depending on the paid-up share capital of the company. As the share capital goes up further, the fee also goes up. Currently 20 fund houses have listed their schemes on the NSE while the Bombay Stock Exchange (BSE) has 23 AMCs on board.