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.
Inside story of the National Stock Exchange’s amazing success, leading to hubris, regulatory capture and algo scam
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So I do not think it is only price manipulation. It is normal people just getting too greedy. The only way they will learn is if they lose serious money. I would be happy if that happens occasionally as then it will keep check on such rampant stupidity.
What do you expect SEBI to do? Investors are not schoolkids who need a monitor every now and then. If they are so sloppy with their hard-earned money, I think they deserve to lose it. I don't think one should cry over their misfortune.