Amdavad's grey mkt decides IPO listings

Nimish Shukla / TNN / Feb 1, 2007, 22:43 IST

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Sources said that large investors and traders are currently trading in various shares, which are yet to be listed, at premium to their offer prices.

AHMEDABAD: You don't just look at the prospectus when subscribing to initial public offers (IPOs) of companies. Street-smart investors would rather look at indicators from the booming grey market in Ahmedabad, by far the biggest in the country, before taking a call on IPO investments.
It is not only market-savvy investors from Gujarat, but investors, merchant bankers and lead managers to IPOs from Mumbai, Delhi and other parts of the country who consider Ahmedabad's grey market's premium rates as main determining factor for levels where IPOs would get listed.
"We have some leading portfolio managers and executives from foreign institutional investors also calling up for grey market rates,"said an operator.
The grey market in Ahmedabad, operating out of Sakar Bazaar, was severely hit during the meltdown in the stock markets in May-June last year.

But it has been buzzing with activity with daily volumes in each of the forthcoming IPOs running into thousands of shares.
Sources said that large investors and traders are currently trading in various shares, which are yet to be listed, at premium to their offer prices.
Shares of Idea Limited, for instance, are being traded at Rs 14 premium to its offer price range of Rs 65 to Rs 75.
Similarly, shares of First Source, Indian Bank and Power Finance Corporation are also trading at a premium of Rs 15, Rs 22 and Rs 32 respectively.

Ever since the successful listing of Tech Mahindra and GMR Infrastructure, retail investors too have joined the IPO bandwagon in a big way.
"Earlier only big players who take large exposure in the new IPOs were trading in the grey market in order to hedge their positions. Retail participation in the market is also now at an all-time high,"sources added.
Settlement in the grey market takes place once the allotment is made to the subscribers of the IPOs. As per the rules of the game, once the deal is done at a stipulated amount, the seller has to give delivery of shares once he gets the allotment.
If the seller falls short in receiving the exact numbers of shares that he has sold in anticipation, then he will have to buy the shares from the market once the share gets listed in order to honour his commitment.

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