Inventure makes an audacious debut. SEBI and exchanges are sleeping

To the utter amazement of the entire market, the stock of the broking firm was rigged up non-stop to Rs225 from Rs91, once again making a mockery of regulators, raters, and the entire market system

Stockbrokers may be cutting branches and staff but the stock of broking company Inventure made a debut today that had all the hallmarks of a red-hot chip. Last month, amid deep general gloom and a virtually dead IPO (initial public offering) market, Inventure defied sceptics to make an issue at a princely price of Rs117. Market watchers wondered whether the stock would find takers. Not only was the stock subscribed, but today it opened at the issue price. In line with a weak market, the stock fell to Rs91 and it is then that speculators stepped in. The stock jumped from Rs91 and rose non-stop all the way to Rs225, up by a huge 92%, even as the Sensex was down by 250 points. The stock closed slightly below the high of the day. Stunningly, on its debut, Inventure was the highest-traded share in the market today. Trading volume was a hige 5.87 crore shares, 60% more than the second-highest traded stock Lanco Infratech Limited.

 All this would leave a casual market watchers stupefied. Of course, a Moneylife reader would know that the IPO market can be easily manipulated. We had written earlier on how a cabal of Mumbai and Gujarat operators can ensure the full subscription and subsequent price-rigging of any scrip-irrespective of the fundamentals- right the under the nose of the Securities and Exchange Board of India (SEBI) and the two "national" exchanges, the Bombay Stock Exchange and the National Stock Exchange.

Fitch /ICRA had assigned an IPO 'Grade 2' to Inventure's IPO. According to these rating agencies, the company has 'Below Average Fundamentals'. Both rating agencies assign IPO grading on a scale of 5 to 1, with 'Grade 5' indicating 'Strong Fundamentals' and Grade 1 indicating 'Poor Fundamentals.'

The issue has received bids for more than 3.2 crore equity shares against issue size of 70 lakh shares. Non-institutional and retail investors subscribed over 9.49 times and 8.66 times, respectively.

The company intends to spend the issue money for investment in its subsidiary, Inventure Finance Private Limited and long term working capital.

A broking firm coming up with an IPO during a time when other broking firms are cutting jobs due to stiff competition was indeed surprising, to say the least. We now know why.

You may also want to read:

1)    IPOs: Manipulation rules
2)    What ails the Indian IPO market-I?
3)    What ails the Indian IPO Market?-II

1 decade ago
I think are regulators are colluding with punters
1 decade ago
If you carefully see the listing notice issued by both the exchanges.The company has not correctly disclosed the name of FII who has subscribed to 3.33% of post issue capital under the public holding >1% category. This was pointed out to both the exchanges but no corrective actions were taken
Vaibhav Dhoka
1 decade ago
This sleeping regulator is not new to punters.They know well when to en cash this sleep and they rig the Market.Recently I have been to a bro king house in Pune and senior executive there bet me on action on BROKERS from SEBI on INVESTORS complaint.So cycle of scams are bound to be repeated with our sleeping REGULATOR SEBI and seems to be sleeping Exchanges.
1 decade ago
What you says make lot of sense. What if someone was naïve enough to buy at Rs.225/-? We will know their fate in the days or weeks to come.
1 decade ago
I recall that as per Listing rules, on day of listing, teh stock is given a free reign so the price discovery can take place.
1 decade ago
1 decade ago
Maybe there was no manipulation.

Maybe the shorts got squeezed badly.

Trading interest in newly listed stocks is very high. Day traders short such stocks in large quantities and often get trapped because of the small free float.
1 decade ago
Exchanges are not sleeping. They are well awake and may be participating in the gains.
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