Share ends at Lower Circuit as Expected

Shares of V-Mart Retail Limited listed on the bourses and except for the momentary flourish in having a higher discovered price was virtually locked at the lower circuit for the entire day. The whole day’s trading looks completely rigged and merits investigation from the market regulator SEBI.

The company had tapped the capital markets with its simultaneous offer for sale and fresh issue for 44.96 lac shares in a price band of Rs 195-215. The issue received inadequate response from the retail category where it was undersubscribed at a mere 0.79 times the reservation. Even this subscription was not from genuine retail investors but was garnered under buyback from the grey market and the same could be easily seen from the day’s trading. The overall issue was subscribed with the help of QIB’s and HNI’s and buying application forms and ‘managing’ to get the issue subscribed.

The discovered price was Rs 216 on the BSE which happened to be the high of the day, while the discovered price was Rs 214 on the NSE. The high for the day on NSE was Rs 215 and from there on it was just one way down. The most fortunate thing for the share was that there is a 5% circuit filter on the stock and it could fall no more than that.

The first hour’s trading on the BSE saw a volume of 1,15,183 upto 11 am, and this increased by a mere 455 shares in the remaining 4 and a half hours of trade to end at 1,15,638 shares at the end of the day. On the NSE the first hour saw volumes of 2,34,471 which increased in batches of bulk trades to finally close at a volume of 5,46,941 shares. Here lies the interesting part as to who were the buyers of the share and who were the sellers. The retail portion was undersubscribed and with virtually no incremental trading happening on BSE, why were the sellers confident that their sale orders would get executed on the NSE? Who was the buyer? IT may also be mentioned that around 3 pm there were sellers for over 2 lac shares on the NSE at a single point of time. A trade kept on happening in bunches and the volume traded kept on increasing hourly. Between 12 noon and 1pm the volume increased by 55,000 shares, by 9,000 shares between 1 and 2pm, by 58,000 shares between 2pm and 3pm and a whopping 1,82,000 shares in the last half hour 3pm to 3.30 pm. The question that again comes to mind who were the sellers and who were the buyers?

The total volume was 6.62 lacs which was 14.73% of the IPO size. There is still more to go and another 4 lac shares need to change hands before grey market deals are settled. This presupposes that all trading done today was part of the grey market operation.

The questions and answers are both there. The links have to be established. The issue was overpriced and did not deserve such valuations. The issue was ‘managed’ to be subscribed and all means to get the same subscribed were used. The end result is the same, investor gets short changed.

One more IPO, one more listing and the end result one more disaster. The story never changes. Let’s hope SEBI looks for the various shortcomings in the IPO and investigates this issue and its lead managers. The investigation into the issue would expose the modus operandi used by people in the thick of things to fool the people and particularly innocent investors into losing their hard earned money.