Rochak Chauhan::Unpredictably Exciting

Mumbai: India’s biggest-ever initial public offering (IPO) of Rs 11,700 crore ($3 billion) fell more than 13 per cent after debuting at its IPO price Rs 450 on Monday.

The much-hyped Reliance Power IPO had a disappointing listing at the Bombay Stock Exchange (BSE). At 1005 hrs IST, the shares were down 5.2 per cent at Rs 426.50, while the benchmark BSE index was down 1.3 per cent. At BSE, the stock opened at Rs 547.80, a premium of about 21 per cent before slipping to Rs 430 levels.

At National Stock Exchange, the stock was listed at Rs 530, representing a premium of Rs 80 or about 18 per cent over its issue price of Rs 450. The stock was trading 3 per cent below its issue price at Rs 435 on the NSE at 0956 hours. The stock is a part of NSE F&O, the lot size is of 450 shares and options strike priced between Rs 10-1350.

At BSE, the biggest IPO in Indian markets was traded heavily from the word go and it witnessed a lot of price fluctuation, trading consistently below the issue price, It went below Rs 400 at one point to hit a low of Rs 398 before coming back to Rs 400-410 levels. However, the stock inched towards the issue price within 15 minutes and was trading at Rs 440-447 level at 1047 hours.

The markets, as a whole, were in the red at the opening with the BSE Sensex down 230 points and Nifty shedding 120 points at the start of a new week.There have been speculations with one section of investors predicting that the biggest-ever IPO will crumble under pressure while others say it might power a recovery in the markets.

Retail investors had received allotments at Rs 430 a share, while the issue price was Rs 450 per share. The Rs 11,500-crore issue was subscribed in just one minute last month. Reliance Power is the flagship company of the Reliance ADA Group to develop, construct and operate power generation projects.

The company is currently developing 12 power projects with a combined planned installed capacity of 28,000 MW, one of the largest portfolios of power generation assets under developments. Right after the issue was closed, the market tumbled on global fears about the possible impact of the US subprime crisis.

Analysts say if the Reliance IPO overcomes the turbulence in the stock market to fetch a good premium, it could improve sentiment in the market. Last week, Emaar MGF Land and Wockhardt Hospitals had withdrawn their IPOs due to low investor response.