Stock gains over 25%

MCX listed on the BSE where it had a listing ceremony and also was traded on the NSE under the “permitted to trade” category. This effectively means that the company is not required to pay any listing fees to the exchange nor does it need to be compliant to the exchange. The issue had received excellent response and was subscribed 54 times with the QIB portion being oversubscribed 49 times, HNI portion subscribed 150 times and retail portion 24 times. The price band was Rs 860-1032. The company had made an allocation to Anchor Investors and the issue was priced at the top end of the price band of Rs 1032.

The issue had two new developments in the IPO market. The first was it was made mandatory for all IPO’s to include in the RHP the track record of the merchant bankers. The second was the price discovery mechanism during a period of 45 minutes from 9 am to 9.45 am and the matching of trades in the next 10 minutes and allowing normal trading only from 10 am. The circuit filters which have also been introduced in new listings from day one would be at 20% plus/minus of the discovered price. After a very successful auction of 45 minutes the discovered price was Rs 1387 and just fewer than 2 lac shares were traded at this price. Post this discovered price trading began and the high of the day was made in the next few minutes. The high on the BSE was Rs 1426 while it was Rs 1428.55 on the NSE. The low of the day was made in the last half hour of trade at Rs 1282.10 on the BSE and Rs 1282.20 on the NSE. The stock closed at Rs 1297.05 on the BSE, a gain of Rs 265.05 or 25.68%, while it closed at Rs 1296.70 on the NSE, a gain of Rs 264.70 or 25.65%.

From the table above on can see that the total traded volume on the two exchanges was 139.60 lacs which was 2.17 times the IPO size of 64,27,378 shares. The delivery volume was 30,95,471 shares which was 22.17% of the traded volume and 48.16% of the IPO size. The weighted average of the day’s trade was Rs 1345.11 on the BSE and Rs 1339.45 on the NSE signifying the weakness in the share and the selling pressure which was there after the first couple of hours of trade.

The new system of trading on listing day is indeed commendable and it has addressewd the two concerns of investors and market participants. The volatility has considerably reduced and the huge volume that one was used to in earlier issues was certainly missing. SEBI needs to be complimented for such a move.

On the institutional trade there was one purchase where JPMSL A/c Copthall Mauritius Investment Ltd bought 4,20,472 shares and ICICI Emerging Sectors Fund sold 8,00,000 mshares. No other institutional trades were reported.

The BSE price chart clearly indicates the selling pressure that has been talked about and after the first half hour of trade or so, the share has been under pressure.

The above table gives half-hourly data on the two exchanges with volume trade, the average of the half hour and the closing price of the half hour. From the above table it becomes quite clear that the share fell to register its low at around 1.30 pm and made a feeble attempt to recover from there. It was unable to hold on and again fell and made a new low in the last half hour.

The listing has been good with retail investors making some money in the share. It appears that HNI’s who have sold in the first couple of hours would have made money but thereafter the gap would not be enough considering the 150 times oversubscription.

Clearly the first IPO for 2012 has performed well and put pressure on future issues in the pipeline. The success of MCX makes one thing crystal clear that pricing is a key to success and if issues are reasonably priced offering scope for appreciation there is no reason why issues would not do well. One hopes promoters and merchant bankers would take cues from the same.