After the market closed on 18th July, Bajaj Corp announced an offer for sale at Rs200. Strangely, during the day, the stock had already fallen from Rs264 by as much 10% on huge volumes. Will SEBI continue to sleep? Or will its officers find out the details and “settle”?
Bajaj Corp made an Offer for Sale (OFS) announcement on 18 July 2013, which came after market closed that day. Strangely, ahead of the OFS announcement, the trading that day 
was dominated by an unusually large volume and a decline in the stock by as much as 10%. Did someone close to the management know of the announcement and act on it?
It is interesting to note that unusually high trading volumes in the Bajaj Corp scrip that day. The scrip does not trade much. During the period 20th June to 17 July 2013, the average daily trading volumes in the scrip on the NSE were 31,500 shares, with deliverable volumes being 67% of total volumes. Also, the price did not show much volatility during this period—the high and low prices being Rs257 and Rs245, the spread being just 5%.
On 17th July, a day before the OFS announcement, the scrip closed at Rs253.75. However, on 18th July, after hitting an intra-day high of Rs264, the stock crashed by 10% intra-day to touch Rs237, before closing at Rs245. On that day, the trading volumes rose to 272,000 shares on the NSE (a 750% jump over the average trading volume), with deliverable volumes being 64% of total volumes.
There was no significant news in the media or announcement by the company, to warrant such unusually high trading volumes or volatility in the price, on 18th July. In fact, most other FMCG stocks rallied on 18th July, a day when Sensex was up by 180 points. Bajaj Corp was the only consumer products stock which crashed 10% intra-day. Somebody knew something? Around 6 pm on the same day, a couple of announcements appeared on the BSE website, a summary of which is as follows:
The OFS was subscribed 2.44 times.
The question is: was there “informed selling” in the stock on 18th July? It appears so, since the announcement of OFS (including the price of Rs200 per share) was not in the public domain on 18th July during the market hours, and came in much after market close.
Who were the persons/entities who sold the stock on 18th July? Genuine investors, who bought the stock during its crash, would obviously have felt short-changed. Had they known about the OFS lined up, they too would not have bought it from the market on 18th July and would have waited till 19th July, to buy it in the OFS.
Informed entities seem to have dumped the stock since they knew the OFS plans (ahead of the public announcement), and the floor price, which worked out to almost 18% lower than closing market price on 18th July. Therefore, technically the stock was being shorted, since anybody who sold the stock at a higher price would have the opportunity of buying it back in the OFS at lower price. Apparently, they were not wrong, as the indicative price for the OFS has been computed at Rs225.98, on the close of the OFS, as per the NSE website. Obviously, informed circles made a killing of around 10% in just a couple of days. Will the Securities and Exchange Board of India (SEBI), as usual, ignore the compelling evidence or will it act and then “settle”?
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To bring clarity:
Kush Katakia says: There was no short sell. But he does not deny "insider". So what he says is the selling must have been delivery-based, but was certainly possible it was "insider" trading.
Author thinks: Kush Katakia is denying any wrongdoing at all. Author misunderstands Katakia.
Looks like both are in agreement over wrong-doing, but are battling due to misunderstanding!
To bring clarity:
Kush Katakia says: There was no short sell. But he does not deny "insider". So what he says is the selling must have been delivery-based, but was certainly possible it was "insider" trading.
Author thinks: Kush Katakia is denying any wrongdoing at all. Author misunderstands Katakia.
Looks like both are in agreement over wrong-doing, but are battling due to misunderstanding!
I simply pointed out the anomalies in what he wrote in response to my article. Everyone, including I, is entitled to put forth their views. He did it and so did I. End of story.