Reliance Power IPO: What went wrong?

I am lucky, just because both my predictions about Reliance Power IPO Review and Reliance Power IPO Listing are approximately true! Again,I’m just lucky.

Now I’m not here to strut around claiming that the dangers of stock markets and IPO investments that I was worried about, have come out to be true, but after every exam, every failure, there are lessons to be learnt. Every question that I missed or answered incorrectly in the exam, I remember it for life. I was lucky, so I’m repeating this phrase again and again. Markets work randomly & one has to be lucky to make money in the markets!

So what went wrong with Reliance Power IPO? It was supposed to be the awaited listing. It was the IPO that caused millions of demat accounts to be opened. It was the IPO which was trading at double the offer price in the grey market trading. Still on the listing date it went for a tailspin.

The reason was markets and the behaviour of market participants. Everything was good. Despite the cancellation of Wockhardt and Emaar MGF IPO, the markets were waiting for Reliance Power IPO to be listed. The hope was that the Reliance power IPO listing will give a new positive direction to the markets. But it failed miserably.

The reason can be partly contributed to the HNI behaviour – The High net Worth individuals. These are people who apply with crores of Rs., generally on loan. Hence, they were going with the expectations that this IPO will have a fantastic listing. They took up huge loans and applied for IPO in maximum possible quantity in the NI quota. They were paying heavy interest each day. Hence, pressure mounted due to the accumulated interest. They saw that the listing price of the IPO was hovering in the range of 400-430, with no signs in sight that can give a kick start to this share price of Reliance Power. Hence, to cut their losses short, they had to sell the shares.

As selling pressure mounted, the price went down further.. Touched a bottom of 355 or so, and finally closed at 370 or so.
The retail investors also panicked – especially those who had taken a loan for this IPO. Nothing in sight in the near term, they were forced to sell. Same was the case with FII’s and other institutional investors. All invest and trade with limited capital, usually on leverage. All were forced to book losses.

What should the retail investors do?
I usually do not give any trading advice. But if you have the capacity, you can hold on. Forget about it for 3-4 years. Though my valuations tell me that even for 3-5 year horizon, this stock is not worth the initial grey market trading premiums. However, at this level, one may think of holding onto it. If you have the capacity, hold on and forget this stock. It will give you good returns in the long run. Reliance is a big name.

Lessons to be learnt: Again, I’ll repeat - Markets Work Randomly, there is no timing or sure shot money making machine (IPO, short term trading, long term trading, etc) All you need is LUCK, LUCK and LUCK. All the best!

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Reliance Power Listing Price Expectations

Today is the big day awaited by many across the globe. The much awaited Reliance Power is all set to be listed in the secondary market.

What is the listing price expectations of Reliance Power shares?
Well, as per the news, the listing price may be around 560-590 Rs. range and from there it may fall down due to selling pressure from HNIs and Retails investors, as this segment of investors is just waiting to get rid of this highly volatile market situation. The expected listed price was quoted by one of leading analysts on a famous business channel. Let’s see what’s there in place for the Reliance power IPO shares holders.

All the best!

Should you apply to Wockhardt Hospitals IPO and EMaar MGF IPO?

The current situation of Wockhardt Hospitals can be simply described on 1 word – WORST. First, they reduced the price band of the IPO to Rs 225-260 from Rs 280-310. And now they have increased 2 more day for IPO application and the bidding can be done till 7th February.

Is it a Sabji Market or Vegetable Market, where one can try to sell anything and everything by either lowering down the prices or sitting in the market for more hours? I don’t know.
But definitely people who believe that they can make a quick buck in the IPO market should think once again. What are you parking your money in even for a short period of time?

The current situation of Wockhardt hospitals subscription is as follows:

QIB portion of the issue remains unsubscribed. As per NSE data, as on February 4, qualified institutional buyers (QIB) and non-institutional (NI) investors like HNIs have not subscribed to the offer; the retail portion was subscribed 0.06 times. The grey market premium for the Wockhardt IPO was Rs 9-10.

The situation for Emaar MGF is no good either. It has closed today and here is the information about Emaar MGF subscription:
Emaar MGF has seen its QIB category subscribed 0.38 times, NI 0.001 times and retail about 0.01 times. The grey market premium was Rs 40-45 on Tuesday.

Other recent IPOs like Tulsi Extrusions and IRB Infrastructure were fully subscribed on the closing day. Tulsi Extrusions was subscribed a little over two times. But the market is still waiting for the big listing – the Reliance Power IPO, which is scheduled to list on Monday the 11th of February. Analysts say that things may come to normal only after that. All the best to subscribers and applicants.

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Wockhardt Hospitals & Emaar MGF cut IPO Prices

The market is setting more and more examples everyday about how everything depends upon the market situation and how helpless an investor as well as the big companies become when the timing is bad.

After so many stop-payments of cheques for Reliance Power IPO and so much speculation going on about the listing price of Reliance Power IPO – expectations generated from Grey market trading prices of Reliance Power IPO shares – it’ the turn of other companies to feel the heat in the IPO business.

In my review of Reliance power IPO, I had clearly mentioned the possible dangers of companies overpricing the stocks following the euphoria they see by the investors in the stock market. However, when things start to go from bad to worse, the same companies as well as the investors wake up to the senses, finally falling victims to the stock market timings.

The latest news to add to this IPO business is that two major IPO’s - Wockhardt Hospitals& Emaar MGF have slashed down their IPO prices significantly.

Wockhardt Hospitals Limited today said that it has lowered the price band of its initial public offering to Rs 225-260 per equity share.

The revision has been done in the light of current market conditions, the company said in a press release issued on Thursday.

The company had earlier fixed the price band for its IPO at between Rs 280-310 per equity share. The issue opens on Friday and closes on February 5.

Initially, the trade analysts were already of the view that the company has overpriced its IPO.

Other news is about EMAAR MGF:

Emaar MGF Land, which had planned to raise up to $1.8 billion in an initial public share offer in India, has cut its offer price a day before opening, becoming the second company to trim its issue because of market volatility.

The company said on Thursday the IPO price range, initially set at 610 rupees to 690 rupees ($15.50 to $17.50) per share, would be reduced to 540 rupees to 630 rupees ($13.7 to $16), cutting the maximum it can raise to $1.64 billion rupees.

What has gone wrong with these 2 companies? Have they lost their business or values or research or market in just past 1 month? No, it’s all dependent upon the market situation. The timing is bad, so is the anxiety of the investors. Everyone falls victim to market timings and the past month has proved to be a typical case of it. Nothing is certain, you apply for an IPO just 10 days back, within these 10 days, things turn from good to bad to worse. You can only observe the so called good company becoming a bad company (in stock market timings) or loosing significant value.

Markets give returns only in the long run. Today is the listing of Future Group Holding IPO. I hope the listing price of Future Group Holdings IPO is good enough to keep the investors faith. Wishing all the subscribers the very best of luck.

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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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