Trend of FIIs exiting on listing day catches on
The stock of Gravita India, a Jaipur-based manufacturer of lead metal, rose 66.4 per cent on debut today, despite a sharp fall in the benchmark indices. The Bombay Stock Exchange (BSE) Sensex fell 2.19 per cent while the S&P CNX Nifty of the National Stock Exchange (NSE) was down 2.17 per cent.
The stock closed at Rs 210.4 on BSE and Rs 208 on NSE. It made an intra-day high of Rs 255 on BSE and Rs 253 on NSE, as against the initial public offer (IPO) price of Rs 125. The company raised Rs 45 crore. The issue was subscribed 41.28 times.
Recent data indicate that foreign institutional investors (FIIs) sell a big chunk of their holding in newly-listed companies immediately after listing. As big FIIs subscribe, IPOs get good response from small investors also and list at high premiums. However, stocks fall as FIIs exit.
A Citigroup entity sold 22.2 million shares of Indosolar on listing, while a Goldman fund sold 3.4 million shares of Orient Green. Similarly, Merrill sold its stake in Microsec Financial, while Morgan Stanley exited Prestige Estates.
Gyscoal Alloys was listed at Rs 76 as against the IPO price of Rs 71 in October. It was trading at Rs 65 on BSE today. FIIs that exited the counter included Cresta Fund, Deutsche Securities Mauritius, India Max Investment Fund and Somerest Emerging Opportunities Fund. They collectively sold 15.7 million shares allotted in the IPO. The issue was subscribed 8.59 times.
Orient Green listed at Rs 45.7 as against the issue price of Rs 47 in October. It is trading around Rs 33.
Microsec was listed in the same month at Rs 130 as against the issue price of Rs 118. On the listing day, five foreign investors – Deutsche Securities Mauritius, Emerging India Focus Funds, Merrill Lynch, Swiss Finance and the Royal Bank Of Scotland – sold their entire holding of 1.44 million shares.
The IPO was subscribed 12.2 times. The stock is trading at Rs 77.65.
