Heard in the street: Delay in IPO subscription info hurts participation

The time lag in relaying the subscription details of initial public offerings could have led to many retail investors deciding to skip some of the recent issues, claim merchant bankers to recent issues. With the introduction of ASBA (Application Supported by Blocked Amount), QIBs’ bid details are now uploaded by banks unlike in the past, when it was done by merchant bankers to an issue.

Besides, with institutional investors now required to pay the entire amount upfront, they prefer to bid on the last day.

“Banks are taking time to block the account first and then upload the details of the bids. The recent issues got subscribed around 2 p.m on the last day which hardly gave retail investors enough time to gauge the QIB demand and participate in the issue,” said a merchant banker.

Telcos revival catches bears off guard

Till Thursday, the telecom sector appeared to be among the safest “short-sell bets” in a sideways market. But Friday’s upswing wiped off a good chunk of bear traders’ unrealised gains in Bharti and Idea stock futures.

A hedge fund, which had been steadily short-selling both these securities over the past couple of weeks, is said have covered some of its positions, driving up prices further. Despite the spectacular rally on Friday, the market is still divided on the near-term trend in telecom stocks.

Most players don’t expect prices to sustain at current levels, unless the sector as a whole is rerated. That could be the reasons why many traders ventured to go ‘short’ on the stocks, even as they were rising. Open interest in Bharti Airtel futures rose 21% while that in Idea Cellular rose 16%.

What this indicates is that for every fresh long position, a fresh short position, too, has been created. Dealers say that the stocks could rise some more on Monday, as the bears square off their positions, but don’t expect any runaway gains.

(Contributed by Reena Zachariah & Nishanth Vasudevan)