Mumbai, May 22: The absence of a hedging opportunity for Indal, which is in the non-specified category, has been perceived by market operators as a major hurdle in reaping the benefits likely to emerge from the fight between Sterlite and Alcan.A negative mood prevailed among market participants who took an exposure in the Indal counter after it had entered the no-delivery category on the exchanges since May 18.
``If Indal had been in the A group stock, an individual with a position marked for carry forward would have been able to reap the benefits of the revised open offers likely to be made by the two rivals," said a BSE broker, while explaining the reason for the market participants lobbying for a change in the book closure date.
The fact that the no-delivery has coincided with the open offer period, has left market players disillusioned. In this case the specified or the cut off date has a least role to play, they point out. The modified take over code, allows an investor to avail the benefits of anopen offer irrespective of the book closure. However in Indal's case since the no-delivery coincides with the open offer investors are left with little option but to square off their positions by the end of the settlement.
Indal which is currently traded in the no-delivery phase on the local bourses, traded in the band of Rs 136 and Rs 140 on the BSE, to finally close at Rs 137.60, registering a net gain of 2.68 per cent over Thursday's close. The stock recorded a net volume of 12,100 shares on the BSE. However, on the NSE the stock recorded a phenomenal volume of 70,000 shares.
The stock entered the no-delivery phase on May 18 on the BSE and May 20 on the NSE. According to market sources, the no-delivery phase is the ideal time for the punters to rig up the price bringing it to unrealistic levels.
``Trading during the no-delivery phase is purely speculative, hence the element of risk is higher,'' said a dealer with an FII brokerage firm.
With the last day (May 25) for revised offer coming from Alcanor Sterlite for Indal coming closer, the stock lost charm among market participants. On Thursday it shed 8.56 per cent.
Rumours that Sterlite has already made arrangements to bid for the chunk of shares upto Rs 145, saw the counter flare up to touch an intra-day's high of Rs 149 on May 20. However, on Thursday, the stock was traded in the band of Rs 133 and Rs 146, the intra-day's low and high respectively.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
