Financial Daily from THE HINDU group of publications
Wednesday, Dec 17, 2003
Financial Daily from THE HINDU group of publications Wednesday, Dec 17, 2003 |
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Markets
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Stock Markets Sterlite stock in a free fall Virendra Verma
Mumbai , Dec. 16 EVEN after a firm trend in non-ferrous metals and a bullish stock market, the stock price of copper major Sterlite Industries has been falling continuously after the listing of its parent company, Vedanta Resources, on the London Stock Exchange (LSE). From a high of Rs 1,600, the stock of Sterlite Industries has fallen by 23 per cent to Tuesday's closing price of Rs 1,226 on the BSE. In the run-up to the listing of Vedanta Resources, the stock had gained from Rs 200 in June this year to the current levels. Even the stock of Vedanta Resources, the company holding 55 per cent stake in Sterlite, is trading at a discount to the offer price on LSE. Compared to the offer price of 390 pence, the stock is now trading at 354.75 pence, a discount of 9e per cent. The stock quoting at a discount to the offer price gains significance as the issue was oversubscribed four times, indicating that there was good demand for the shares during the roadshows. Stock brokers said the rise in the price of Sterlite was mainly to get better price for the Vedanta IPO. "Since the issue of Vedanta Resources has sailed through smoothly, now select market players (responsible for the rise in the stock price) are not interested in the stock now," said a dealer with a domestic broking firm. The Sterlite stock had been rising due to the rise in the international metal prices and the good fundamentals of the company. However, several market players say the stock is over-valued now. During the run-up in the stock price, several small investors entered the stock at higher levels and are now asking their brokers what to do with the stock. "One of my client bought shares of Sterlite at Rs 1,500 without knowing the details of the company and now he is asking me (after the share has fallen), what to do," said an analyst with a domestic broking firm. He said the floating stock of Sterlite Industries is very low and this was one of major factor for the sharp run-up in the price.
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