Floor prices at a discount to current market prices and sharp increase in floating stocks post issues coupled with low appetite for the issues from retail and institutional investors and lack of easy availability of finance from banks have been the major dampener for these counters, Delhi-based broking sources said. Market sources also said that the statement made by disinvestment minister Arun Shourie expressing his fears that certain interested parties may be pulling down prices of these stocks has contributed to the selling pressure on Wednesday.
With the sharp correction in these stocks, their market capitalisation has dipped by over Rs 4,800 crore since their high on February 19. This has taken the stocks closer to the floor price of their public offerings.
IPCL has dropped 7.21 per cent from its high of Rs 200.5 on February 19 to close at Rs 186.05 on Wednesday, as against the floor price of its public offer of Rs 170.
Dredging Corporation, where the price band has been fixed as Rs 385 and Rs 400, crashed 15.13 per cent from its high of Rs 543 to close the day at Rs 460.85. On Wednesday alone, the stock tumbled 12.68 per cent.
IBP Company and CMC dipped 13.51 per cent and 10.52 per cent to Rs 666 and Rs 540.45 as against their floor prices of Rs 620 and Rs 475, respectively. Gail was the biggest loser plunging 15.59 per cent from Rs 232.2 on February 19 to close at Rs 196 on February 25 as the government fixed the floor price for the issue at Rs 185, later during the day.
Oil and gas behemoth ONGC has plummeted 14.73 per cent from its high of Rs 786 on February 19 to close at Rs 670.25 on Wednesday. The floor price for the stock has not yet been fixed.
Indiabulls equity analyst Dinesh Chandel says: All the public offers have opened at a time when the overall markets in a downward phase. As a result, investors are not sure of the price when their shares get listing on the bourses. In the case of IPCL, Reliance declining to buy the 5 per cent shares offered to the company has also hit the sentiments.
Since the institutional investors are also not going all out for these IPOs, liquidity is also a problem with a host of IPOs being clubbed together.
Most of the money from retail investors is leveraged money (loaned money) and the bank are charging margins up to 40 per cent.