Delivery sales in selloff stocks led to slide

Delivery volumes in six stocks on the divestment list soared immediately after the announcement of their selloff.

A BSRB study shows there was delivery-based selling in these stocks after February 17, which led to the price crash.

Derivatives data show a sharp increase in the futures volumes of three stocks traded in the F&O segment - which means operators used all possible routes to hammer down the prices.

As is known, operator interest in the six public sector undertakings on the selloff list revived just two days before the IPCL offer for sale got rolling.

The market value, volumes and deliveries in IPCL, ONGC, IBP, GAIL, CMC and Dredging Corporation rose substantially on February 18, 2004, but profit-booking in some stocks led to delivery-based selling.

ONGC was hammered down by Rs 100 in five trading days from Rs 769.40 on February 18 to Rs 670.25 on February 25.

The scrip saw average daily traded volumes, but delivery volumes doubled between February 18 and 24 over the daily average between February 1 and 16.

In January, operators lent support to ONGC even at higher levels of over Rs 950. IPCL, which saw delivery buying two days before the opening of bids, declined immediately after its current promoter - Reliance Industries - announced that it will forgo its option of acquiring additional 5 per cent in IPCL.

The stock slipped from Rs 196 on February 20 to Rs 186 on February 25. The average daily traded volumes were up 286 per cent and delivery volumes rose 186 per cent after February 18.

IBP, which got low key response for its public offering, did not see any unprecedented rise in trading volumes and delivery volumes.

However, the stock fell by nearly eight per cent from Rs 723.05 to Rs 667.10. CMC and GAIL more or less remained unmoved in the melee although CMC's traded and delivery volumes rose more than five-fold between February 18 and 25.

GAIL remained listless with average trading volumes and delivery volumes remained steady. Dredging Corporation recorded spurt in volumes basically of the intra-day nature "" trades were not converted into deliveries.