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Our Bureau

Chennai, Feb. 11 Reliance Power listing was a big disappointment for retail investors, who applied heavily for the IPO. Millions investing in the stock have had their hopes and dreams shattered, with the share price falling to as low as Rs 355.30 on the NSE before recovering to Rs 372.30 against the IPO price of Rs 430 (for retail investors).

According to Mr C.J. George of Geojit Securities, there are two kinds of players in the IPO market. One set of people apply for the shares and sell the allotted shares on listing day itself while the other is long-term investors. “This time a lot of investors who had applied for Reliance Power and wanted to exit on the listing day itself were leveraged investors. They were forced to close out their positions at a loss. So far they have made good profits on listing day, when the market condition was good.”

Today, once the price fell below Rs 400, there was panic and retail investors offloaded heavily, added Mr George. Besides, there was too much hype on the issue and this spoiled the sentiment for the stock, he said.

According to Mr Kirit Somaya, Investor Grievance Forum, “The last four IPOs including Emaar MGF, Wockhardt Hospitals and Reliance Power were absurdly over priced. Euphoria was created which was not supported by fundamentals. In the last six months, the market was taken over by people with vested interests and with reality catching up these stocks they suffered.”

Mr George also added: “It seems qualified institutional investors have also sold heavily due to their leveraged commitments. In line with general selling some of the foreign institutional investors could have also exited from the stock.”

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