Heard on the Street

Realty IPOs may face price challenge
Even as India Inc is banking on real estate IPOs to help trigger the muchneeded turnaround in the primary
market, merchant bankers are sceptical about investor appetite. The buzz in the markets is that pricing will be a challenge for all real estate companies who want to hit the market. Given the fact that investors have enough listed stocks at reasonable valuations to choose from, issuers will have to price their offerings at a healthy discount to fair price, for it to succeed.

The perception also is that no upcoming issuer can claim a unique selling proposition. A slew of real estate IPOs is slated to hit the capital market over the next few months. Amongst those who have filed their draft red herring prospectuses (DRHP) with Sebi are Emaar MGF, Lodha Developers, Sahara Prime City, Kumar Builders, etc. Many others in the pipeline include Vascon Engineers, Nitesh Estates, Prestige Constructions, etc.

Investors worry as telcos face tariff pressure
Shares of telecom companies continued to be under pressure in a firm market, as investors are worried about the damage the latest round of tariff war will cause to their bottomlines. Dealers at institutional brokerage houses say the sell orders in these stocks are not huge, but the lack of buying support is aggravating the slide.

For instance, an FII is said to have dumped close to a million shares of Bharti Airtel, leading to a 3% plus fall in the stock price. A leading mutual fund is said to have bought a sizeable chunk of put options of Bharti with a strike price of Rs 350. Bharti shares closed at Rs 339.40 on Wednesday, down 3.25%.

Buying put options seems to be a common strategy among funds which have a significant exposure to the stock, but don���t want to sell at a time when the broad view on the sector is bearish. Among other prominent losers, RCom fell 6.5% and Idea Cellular 3%.

Concoction of liquidity, caution may hit new ���high���
AN interesting tug of war is playing out between a section of local market operators and FIIs. This has happened quite a few times in the past few months, with disastrous consequences for localites. Quite a few domestic traders are said to have initiated short positions last week, but had to cover them up in hurry after the IIP data for August turned out to be much better than expected. Fund managers and brokers say there is too much liquidity and too much caution in the system, which is the perfect cocktail for stocks to hit a new ���high��� .

Contributed by Deeptha Rajkumar, Santosh Nair & Mithun Roy