The current week goes listless, literally! FOR the whole of this week, no new scrips have been listed on the bourses, which is hardly surprising, given that the primary capital market lies completely devastated like never before. The level of activity on the primary market is at an all-time low, and is showing no immediate signs of revival.Last week, this column had appraised readers of the market debut of State Bank of Bikaner and Jaipur (SBBJ). After opening for trading on the NSE marginally above its offer price of Rs 540 on February 4, 1998, the scrip has continued its southward journey during the week, hitting new lows in the process. On the NSE, the scrip, which closed last week at Rs 502.75, opened at Rs 497.25 on February 9, 1998. After posting an intra-day high of Rs 500.25, the scrip sought lower levels and ended the day at Rs 495.50.
On February 10, the scrip opened at Rs 493 before sustained selling brought it down to close at Rs 476.80. The next day was worse, with the scrip continuing itsfree fall to Rs 446, its lowest level so far, before marginally recovering to end the day at Rs 446.90. Thus, in a matter of less than a week on listing on the NSE, the scrip has lost more than 17 per cent of its offer price. Significantly, retail trade continued to dominate the volumes, with the counter witnessing volumes of 375 shares in 51 trades, or about 7 shares per trade on February 9; 1,165 shares in 104 trades, or about 11 shares per trade on February 10 and 675 shares in 91 trades, or about 7 shares per trade on February 11.
Trading in the scrip on the BSE largely tracked the trading pattern of the scrip on the NSE. The volume has, however, remained very low on the BSE unlike that on the NSE, where it has been consistently higher. Apart from SBBJ, the only other debutant last week was the minuscule finance company from Calcutta, Allied Stock Investors Ltd, which made its maiden appearance on the OTC on February 5. This company has a post-issue capital of Rs 1 crore, of which the public offeramounted to a minimal Rs 30 lakh. The issue, which closed on January 8, 1998, got listed on the OTC on February 5, 1998, that is, after a gap of only 28 days. The scrip traded at par in the first five trading days. The City of Joy has the knack of throwing up finance companies by the dozen, of which Allied Stock is the latest entry.
Given the current situation in the financial services industry, where even finance majors find the wind knocked out of their sails, how can a small finance outfit like Allied survive the gale? One only hopes for the sake of investors that Allied Stock doesn't evaporate before one says `Saurav Ganguly'! During the first 10 months of the current fiscal, 90 scrips got listed on various bourses of the country. Of these, 11 public issues raised more than Rs 10 crore while 79 raised less than Rs 10 crore. A scrutiny of the performances of the 90 debutantes on the bourses reveals some interesting information.
The 79 companies whose public offers were less than Rs 10 crore eachincluded 4 premium issues while the rest were offers at par. Out of the 79 scrips, on listing, 38 scrips traded above their offer price, 14 below their offer price and 17 at their offer price. There were no trades in respect of 10 scrips. Out of the 38 scrips that traded above the offer price, there were some impressive members which notched up gains in excess of 100 per cent to their offer prices like Cybertech Systems Software (650 per cent), Pushpanjali Floriculture (440 per cent), Parnami Habitat Developers (310 per cent), Infotech Enterprises (300 per cent) and Sofcom Systems Ltd (130 per cent). Of the 14 shares that traded below their offer prices, the loss was in excess of 50 per cent in the cases of Senbo Industries and Mask Investments, each losing 80 per cent of their offer value on listing.
Surprisingly, at current levels too, this segment's collective performance has not been bad at all. Thus, at current prices, 40 scrips remain above their offer prices, 25 below their offer prices and 5 attheir offer prices. There has been no trading activity in respect of 9 scrips. Of the 40 leaders, the gains recorded by 7 scrips vis-a-vis their offer prices exceed 100 per cent with Cybertech Systems once again leading the way with a gain of 795 per cent followed by Pushpanjali Floriculture (475 per cent), Parnami Habitat Developers (298.5 per cent), Infotech Enterprises (265 per cent), Kolar Securities (260 per cent), Sofcom Systems (228 per cent) and Offshore Finvest Ltd (155 per cent). Of course, the occasional black sheep like Kolar Securities cannot be ruled out among the phenomenal gainers. Among the 25 losers, 13 scrips have shed more than 50 per cent of their offer prices with Senbo Industries claiming the dubious distinction of notching up the maximum loss of 99 per cent. This being an issue at par, the share's value has almost completely eroded.
In contrast to this segment, the top 11 companies with issues in excess of Rs 10 crore each, and which cumulatively issued equity of Rs 1,492.98 crore,or nearly 86 per cent of the total issued amount of Rs 1,744 crore by 90 companies during the current fiscal, presented a mixed bag. Of the 11 issues, 8 were premium issues and the rest were issues at par. On listing, 10 scrips quoted above their respective offer prices while Dhanalakshmi Bank spoilt the party by trading at a discount of 16 per cent to its offer price.
At current levels, however, 7 scrips out of a total 11 which represent the majority of the pack, traded at values below their offer prices while only 4 scrips remained above their offer prices. Amongst the 4 gainers, the gains ranged from 9 per cent in respect of Rain Calcining Ltd to 39.6 per cent for GRML Capital Markets Ltd, with ICICI Banking Corporation (13.7 per cent) and Corporation Bank (30.1 per cent) at intermediate levels. Among the 7 laggards, the losses ranged from a meagre 1 per cent for Welspun Gujarat Stahl Rohren to 48.5 per cent in respect of Dhanalakshmi Bank, with Madras Fertilisers Ltd (20 per cent), Bank of India (22per cent), Indraprastha Medical Corporation (30 per cent), Gujarat Mineral Development Corporation (30.2 per cent) and GSFC (45 per cent) at intermediate levels. As for the 4 banking scrips forming part of this segment, the honours were shared evenly, with Corporation Bank and ICICI Banking Corporation notching up gains while BoI and Dhanalakshmi Bank lost value over their offer prices.
Given this scenario, what does the future hold for new debutants on the bourses? Well, your guess is as good as anyone's!
(Arranged by Investar -- The Aarthik News & Research Syndicate)
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
