The announcement by the Anil Ambani-controlled Reliance Power of offering bonus shares to investors did the trick on Monday for the stock, at least for the time being.
According to dealers, another reason for the spurt in the stock price was short-covering in the derivatives segment. The open interest in the R Power stock futures (current month series) reduced by around 3.26 lakh shares to 77 lakh shares. The stock futures for the February series was trading at a Rs 410, a discount of Rs 3.95 from its spot price.
The stock, which had witnessed an unimpressive listing and drew flak from irate investors ever since its debut on February 11, surged to Rs 413.95 on Monday, posting a gain of Rs 29.45, or 7.66% from its previous close of Rs 384.50. But, it is still trading below the issue price of Rs 450.
The company on Sunday announced possible bonus shares for all non-promoter investors, and that the ratio of bonus shares would be decided at a board meeting on February 24.
But, despite the announcement, analysts and the broking community are on a wait-and-watch mode. Said Manish Sonthalia, VP, portfolio manager and equity strategist, Motilal Oswal Securities, ?The announcement of bonus shares is a corrective step aimed at lowering the cost for retail shareholders, especially after the poor listing on the bourses. The true consequences of this will be understood only after the ratio of bonus shares is announced. But, definitely, liquidity will increase in the counter. An offer of 1:5 would still not be covering up the losses of the investors as the stock has reduced by more than 20% since listing. Also, a 1:1 ratio seems unlikely.?
Some experts also believe that the announcement is a ?soft? way of telling investors that the issue was overpriced. Some others say it is a strategy to keep disgruntled investors happy ahead of the next IPO?of Reliance Infratel?from the Reliance Anil Dhirubhai Ambani Group (R-ADAG).
The bonus announcement didn?t seem to do much for the other R-ADAG stocks. With the exception of Reliance Communications, all other group stocks ended the day in the red.
Meanwhile, the benchmark indices, due to a lack of specific triggers, ended flat after witnessing choppy trades throughout the day. The 30-share Sensex closed at 18,048.05 points, losing 67.20 points, or 0.37%, while the broader S&P CNX Nifty lost 26 points, or 0.49%, to close at 5,276.90 points.
Foreign institutional investors continued to withdraw money from the markets and provisional data from the stock exchanges show they were net sellers at Rs 342.08 crore on Monday.