The Hindu Business Line : Reliance Power: Investors awaiting D-day

Chennai, Feb. 8 How expectations in the stock markets can change in a drastic manner within a few weeks can be seen from the sentiments expressed by investors in Chennai who’ve been allotted 15-17 Reliance Power shares in the retail category.

During the run up to the IPO, as the Sensex hovered in the 20,000-21000 category, those who planned to apply for it were talking about the listing price “being nothing short of a four digit mark.”

Investor response

But as the Sensex was barely able to keep its head above the 17,400 mark at Friday’s closing, and markets digested news of two IPOs — Wockhardt Hospitals and Emaar-MGF — being pulled off due to dismal investor response, expectations were scaled down drastically.

Mr A. Raja, a Chennai businessman whose family members have managed to get 17 shares each, said he had originally expected at least a cent per cent profit.

“But now, the market is looking quite scary.”

His other major investment is in Reliance Petroleum — average price around Rs 190 — and he says he’ll sell even these shares if “I get my cost price. It’s all very well to have faith in Mr Mukesh and Mr Anil Ambani, but at the end of the day it is my money which is on the line, and I have to protect my capital.”

True value

Mr S. Srinivasan, a Chennai-based mutual fund advisor and a long-term equity investor himself, had applied for the Reliance Power IPO in the names of all his family members.

“All of us have got 17 shares, and on Monday, we’ll be lucky to get Rs 600 for our shares. Except for one holding, we’re planning to sell all the shares.”

Does he think it might even dip below the issue price? “I doubt this will happen on the first day…. . But I’m certain that eventually this will happen; this year might not be a great year for the equity market as the last few years and there will be several good opportunities to buy good companies at great prices.”

But there are also long-term investors who are sure they will not even look at the price on Monday.

Said a woman investor, “When I applied for this share, I knew that they will not even begin production till 2011. So where was the question of getting the true value of the company on listing day, unless through speculation? I’ll keep my shares for at least a few years.”

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