NMDC falls 13% as retail, HNIs cash out

With retail and high net worth individuals (HNIs) on a selling spree, the share price of public sector mining firm NMDC, which recently came out with a follow-on public offer (FPO), has witnessed a steep fall of over 13 per cent in just two trading sessions. The stock is now trading close to the issue price of Rs 300.

The share, which had opened for trading at Rs 350 on Tuesday, fell to Rs 304 at close on the Bombay Stock Exchange.

According to market sources, those individuals who had bid for the FPO, which was open for subscription between March 10 and 12, had made profits of 5 to 10 per cent by selling their shares in the open market in the last two trading sessions.

“Retail and HNIs who have been allotted the shares are selling in the open market and have made gains of nearly Rs 25 a share, as the stock was trading between Rs 325 and Rs 350 on Tuesday and Thursday,” said independent equity advisor S P Tulsian. The NMDC FPO was priced in the band of Rs 300-350. All retail and HNI applicants got the desired number of shares, as both categories were under-subscribed.

While some retail players who had bid for the FPO got the shares in their demat accounts on Tuesday, almost all are likely to get it by today. As the FPO was priced at Rs 300, retail investors stand to gain by selling their shares on Tuesday and today, as the per-share cost for them will be only Rs 285. The government had announced a 5 per discount for retail investors.

Most HNI’s, too, sold their shares, as the stock was quoting between Rs 300-350 in the last two trading sessions.

Those who had sold NMDC shares on Tuesday would have to give delivery only on Friday, as the exchanges allow two days for trade settlement. On Wednesday, the markets were closed. Those who sold the shares today would have to give delivery only on Monday.

According to Tulsian, the chances of market participants being unable to deliver their shares are very little. FPO shares will not require separate listing, as they are being allotted “pari passu”, which means a secondary issue of shares that carry equal rights with existing shares.