Goenka Diamonds and Jewels Limited listed on Friday. The day was hectic in all respects and it has created some records but unfortunately of the dubious type. The share saw huge trading volumes but the delivery volumes were very poor. The share has been controversial from day one and it appears that this share and controversy are made for each other or that this share likes being in the limelight.
Diamond company shares have not been very kind to shareholders or investors and Goenka has kept up with that track record. The share opened at Rs 130 on the BSE and Rs 124 on the NSE. Within a few minutes of opening the lows were made at Rs 92.35 on the BSE and Rs 92.20 on the NSE. Short covering and at times frantic short covering saw the share rise to its highs of Rs 141.35 on the BSE and Rs 141 on the NSE.
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The traded volume was huge with over 6.72 cr shares being traded. This volume is 7.17 times the final IPO size of 93.71 lakh shares. The delivery volume of 19.26 lakh shares was a mere 2.87% of traded volume which is indeed very low and surprising to some extent. However as a percentage of total IPO size the delivery is 20.55%. This figure is also very low and if compared with recent IPO’s where the first day results in delivery of anything between 50 and 80% is significantly lower. One way of describing this trade is the fact that post the listing of Shree Ganesh Jewellery, the sentiment towards diamond or jewellery companies is fairly negative. On top of this is the subscription of Goenka which is itself a major story and has further weakened the sentiment. In this backdrop, people have short sold the stock in the morning.
Readers will recall that the weighted average at the end of the first two hours of trade was Rs 108.70 or thereabouts and the share price was about 2 Rs higher. The share then went into a huge speculative drive, short covering and the volume increased in the next four hours from 1.9 crs to over 6.7 crs. This extremely heavy volume and poor or negative sentiment saw short covering at the fag end. The weighted average close of the day was just about Rs 127-127.50 but the last trade was around Rs 120-121.
The delivery percentage is very low and the huge volume, even more than normal indicates that the share is under speculative control and it may be best to stay away from the share for some time. The fact that delivery has yet to happen also indicated that weakness could step in if the share breaks and trades below Rs 115 and then Rs 110 for some time. I believe this share is likely to be injurious to health even for traders.