This week the high profile NHPC listed and is included in the list. This is also the last week for Excel Infoways and having completed one month of being listed, we would cease covering this stock next week onwards.

The selling pressure saw the volumes increasing on the counter. The total delivery since listing or in the four days of trading is 49.23 cr shares or roughly 29.5 % of the IPO. Considering the issue size this is a huge number and confirms the fact that probably the share was overpriced and the hype created during the road show increased the interest of all the various segments concerned leading to an overall subscription of over 23 times and the HNI category of roughly 55-56 times.

Subscription to OIL India opens from Monday the 7th of September and remains open till the 10th of September. The response to NHPC post listing has been weak and led many people in the retail category who have not yet sold their shares to suffer a notional loss. The sentiment is affected and has become negative to a certain extent as regards new issues.

IOC has announced that its board of Directors would consider an issue of bonus shares on Sunday the 13th of September. The government is also considering the increase in price of gas being supplied by ONGC. This would help ONGC improve its margins as at the proposed rates there would be no loss suffered by ONGC on the gas front. This would be positive for ONGC and also for Oil India. These measures maybe unrelated but do give a sense that the OIL India issue needs to be supported and the present sentiment is not the best.

Adani power also saw huge selling pressure, with the share going below the issue price and closing below the issue price as well. This is for the first time since listing on 20th August that Adani Power has closed below Rs 100. The closing price was Rs 98.60.

There are two objectives to be achieved in the next four trading sessions. The first is to ensure that OIL India issue receives the proper response and the issue does well for itself befitting the size and stature. The second objective is to ensure that sentiment does not get further affected on account of the price fall in the shares of NHPC. I believe it would be interesting to see how NHPC performs and also the interest that is generated in the oil stocks such as ONGC, IOC, HPCL and BPCL in the next three days.

In conclusion NHPC is weak and would be under pressure during the next week. The stock is likely to see strong support around the 30-31 levels.  

Markets had fallen sharply on Monday, but on Tuesday they opened very strongly in Asia as well. Indian markets also opened strong. It was the ideal situation anybody could have hoped for a listing. NHPC had the perfect setting for listing, after huge interest was generated during the road show and the issue garnered oversubscription of over 23 times. Even retail participation was excellent and more than thirteen lac applications were garnered.

The listing ceremony was held at the Convention Centre of the Mumbai Stock Exchange and the share opened at Rs 39 a gain of Rs 3 or 9 % against the issue price of Rs 36. On the NSE the listing was even more spectacular with the stock listing at Rs 42, a gain of Rs 6 or 18 %. Alas! This was too good to be true. On the BSE the stock made a high of Rs 39.75 while on the NSE the open was the high itself. Thereafter even though the BSESENSEX was up as much as 257 points and the NIFTY 73 points, it made no difference to the price of NHPC – the stock just kept on slipping and slipping.

The table appended above shows the volume which took place and I believe this is the highest traded volume in any share ever on the bourses. A total of 70.24 cr shares were traded on the exchanges and the value of these trades were about Rs 2625 crs. The shares which were sold for delivery were extremely high at 35.255 crs or 50.19 %. In the case of Adani Power the percentage delivery of trade on day one was a mere 33 % and one must also bear in mind that the total traded volume was substantially lower at 26.07 cr shares against 70.24 cr shares in the case of NHPC. The issue of NHPC was for 167.74 cr shares and of this issue the delivery percentage is 21%. This is a high number and clearly shows that investors irrespective of category have a tendency to sell on listing day.

The fact that the stock closed almost at its low indicates that the selling is not over and the stock is likely to continue to be under pressure even today. US markets were substantially down last night and the Dow Jones lost 185 points or 1.95%. If Asian markets continue to be weak taking US cues, NHPC could be in trouble holding on to the issue price of Rs 36.

OIL India issue opens on Monday the 7th of September. The performance on day one of NHPC certainly does not add comfort of any sort to the OIL India issue. The euphoria of NHPC has disappeared and seeing the debacle on listing day, people are now discussing the pricing of NHPC. At the time of the issue nobody was concerned about valuations or the fact that the company had an EPS of just over one rupee and therefore the PE of the company was over 34 times. It may also be mentioned that grey market premiums had touched a staggering Rs 12 or a 33% premium to the issue price of Rs 36. Once again the old adage that grey market premiums disappear as listing day nears held true.  

NHPC was the second mega issue and with both being from the power sector, there were high expectations. Power has huge growth potential and the opportunities seem unlimited currently. Both issues have failed to live up to their hype and euphoria created or generated during the road show period. There would be a definite bearing of this on the remaining IPO pipeline which has more than 125 issues lined up. A greater impact would be on the issues from the power sector companies and the PSU divestment companies.

Let us hope promoters and merchant bankers learn from this issue and ensure that there is enough left on the table for the risk taker. One final thought and prayer for the health of the primary market is that NHPC manages to hold on to the issue price and that the promoter of the company lends support to the issue.

Details at 10.45 am are as follows:-

The total volume traded is already 36.33 cr shares which is roughly one fifth of the shares issued. More on it during the day.

NHPC shares were issued at Rs 36 and in the grey market the premium had touched levels of Rs 12 or 33% higher than the issue price. Over the last few days the premium has dropped significantly and is currently about Rs 4-5 and very few trades are actually happening. There are two important repercussions to the issue performance of NHPC post listing namely: – the success of NHPC will determine the success of the issue of Oil India which opens on 7th September 2009 and secondly HNI’s cost of application was around Rs 7.50 per share. If they do not make money there could be some selling pressure on NHPC and secondly bring about a dampener to the subsequent issues. 

The HNI category with the employee under subscription added was oversubscribed 54.75 times. Taking the highest retail allotment of 713 shares, the similar allotment in the HNI category was for an applicant who applied for 39025 shares. The oversubscription in this category was 54.75 times. The cost of application for an investor who took a loan in the HNI category at 10% with a margin of 5% for a period of 13 days is Rs 6.67 per share. This interest cost has reduced as the allocation increased on some cancellations or withdrawals and also because of addition of shares to the category on account of employee under subscription. 

The issue is to be listed on Monday or Tuesday and would be finalised in a day or two.