Reliance Power IPO Listing Price expectation-Grey Market Trading Premiums: Finance Trading Times

Reliance Power IPO Listing Price expectation-Grey Market Trading Premiums

The markets are going ga-ga up and down, round and round, with no clear picture in sight at the moment. However, it’s also the time when the much awaited listing of Reliance Power is just about to happen in next few days with the allotment status already declared and the allotment expected to be completed this week.

What are the expectations from the Reliance Power IPO, what can be the listing price of Reliance Power IPO stock, what is the trading rate in the grey market for the Reliance Power IPO shares? Let’s see some of the news items related to these questions.

Investors who had invested their money are sitting with big hopes of getting a huge premium and a quick profit making opportunity. However, they are put off by the currently trading grey market premium of the Reliance Power IPO stock or shares.

Unfortunately, the grey market premium for the Reliance Power IPO that has been observed to see a continuous decline since the issue was brought to the markets. As per the news, the last seen grey market price of Reliance Power IPO stock was hovering around the Rs 150-160 level, i.e. against the issue price of 450, the total trading price in the grey market is around 600-610 only. This is in way short of the initially traded prices in the beginning days when the premium was more than Rs 450 or the trading price of 900 Rs. a share.

Here is the news that can be heard on business news channels and different news websites:
According to grey market dealers, there are people who are ready to sell their shares at a premium of Rs 150 but are not able to do so for the lack of buyers. “There are hardly any buyers in the market,” said a source. “While we may blame the global liquidity crisis for all the problem, the bottomline is that retail investors and HNIs have taken a hit,” he added.

Grey market refers to an over the counter market, where shares are traded before they are actually listed on the bourses. Interestingly, while the premium in this unofficial market cannot be taken as a benchmark for determining listing gains, it is always considered to be an important factor.

The premium plays an important role especially for investors, who borrow money to invest in public issues. The quantum of listing gains has to be more than the borrowing costs to make it a profitable proposition. Such costs cover the interest charged for borrowing money, which could be as high as 40-50% in a booming market.

Interestingly, it’s not only the Reliance Power IPO shares the only issue that have taken a hit. There are quite a few ongoing IPOs and some in the pipeline that are facing difficult times. The grey market premium for Shriram EPC is around Rs 30. Similarly, the premium of OnMobile Global is between Rs 30 and Rs 40. OnMobile was given a Crisil IPO grade of 4 indication ‘above average fundamentals.’

Issues like IRB Infrastructure, Bang Overseas, Cords Cable and J Kumar Infraprojects have all witnessed a fall in their respective grey market premium. However, sources say that Future Capital Holdings proved lucky with its premium remaining above the Rs 300 mark. The issue price has been fixed at the upper end of the band at Rs 765.

Interestingly, market participants are still of the opinion that the listing of Reliance Power will be a big event. “A huge premium or not, the whole nation will be glued to the screen when the stock lists on the bourses,” said a dealer with a domestic brokerage.

However, with the overall sentiment in the secondary market turning bearish, the issue took a hit with even reports of many investors issuing stop payment instructions to their banks. This is a good example (better to say a good lesson) for all the investors who believe that the so-called good companies, with great fundamentals are sure to make a faboulous listing on the listing day. It all depends upon the existing market situation, even good companies take a hit and even bad companies hit the jackpot. Anyways, the above mentioned details are only news items and no one can predict what can happen in the future. Let’s hope that the listing of Reliance Power IPO is a good one. All the best!!
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1 Comment: Post your Comments

Bhavik said...(on 30 January 2008 at 23:54 )  

Any Idea about on which date stock is going to be listed?

Wish you all happy and fruitful trading and investing activities with safety! = = = Post a Comment

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