Shares of Shemaroo Entertainment Limited listed on the BSE and NSE today and had a disastrous debut. In the price discovery session interested parties or people close to the management were able to fix the discovered price at Rs 180 against the issue price of Rs 170. The advantage of fixing this price is that the circuit filter would be Rs 9 higher or lower than the base price of Rs 180. The share was under pressure immediately after and has been locked at the lower circuit of Rs 171 on both the exchanges within a couple of minutes of trading commencing.

This clearly indicates that the price discovery and subsequent selling is in concert and appears to having been done at the behest of the promoters. This is a case which needs to be investigated as one gets a feeling that investors have been taken for a complete ride.

The total traded volume on the two exchanges combined at 1.30 pm after three and a half hours of trading is 19.1 lac shares against an issue of 70.58 lacs. This means that 27% of the IPO has been already delivered in actually the first few minutes itself as the share is locked at lower circuit thereafter.

It appears that the discount given to retail investors was merely to entice them into the issue and get over subscription, a ploy which has worked. One would like to keep one’s fingers crossed and hope that this listing does not in the next week when trading commences on Tuesday does not turn into a nightmare.

More of this disastrous listing tomorrow.