Avenue Supermarts IPO: Low free-float in D-Mart may drive up the share price

Sebi turns the heat on MCX staffers and the latest tranche of CPSE ETF may not perform so well

Demand for shares of Avenue Supermarts, which operates the supermarket chain D-Mart, is likely to spill over to the secondary market following the successful initial public offering (IPO) last week. Market players say the low free-float in the company would drive up the share price. D-Mart has issued fresh shares worth Rs 1,840 crore in its IPO. Of this, half would be owned by institutional investors, who are usually long-term investors. Also, some retail (small) investors too would like to stick to their investments given the growth potential. “Only shares worth around Rs 600-800 crore could be available for active trading. This is less than five per cent of the total shares of the company, which would lead to scarcity, given the demand,” said a broker.

Samie Modak

 

Will CPSE ETF be as lucky this time?
 
Market participants suspect that the latest tranche of the Central Public Sector Enterprises (CPSE) exchange-traded fund (ETF) may not be as successful as the previous two. The government will launch the third tranche of the 10-share PSU index on Wednesday, to raise Rs 2,500 crore. The further fund offer of Rs 6,500 crore comes just two months after the second tranche. The reason for suspecting a tepid response is that the outlook towards energy and commodity companies has turned subdued. The CPSE ETF is an energy-heavy index with stocks like Oil and Natural Gas Corporation, Coal India and Indian Oil. Also, the Centre has reduced the discount to 3.5 per cent, from the earlier five per cent. The ETF, however, will sail through with the help of investment from pension and insurance players, feel experts.

Pavan Burugula

 
Sebi turns the heat on MCX staffers
 
Around 35 former and current executives of the Multi-Commodity Exchange (MCX) are under the Securities and Exchange Board of India (Sebi) scanner for allegedly selling shares of the company ahead of the National Spot Exchange (NSEL) crisis in July 2013. Show cause notices were served under Section 11 of the Sebi Act, seeking explanation for trades in MCX between January 2012 and December 2013, said sources. Individuals involved were asked to submit bank details. The Sebi action follows the Bombay High Court directive in 2014 that the regulator should consider a complaint filed by an NSEL investor, alleging that promoters of Financial Technologies and MCX had breached regulations, including insider trading and unfair trade practices just before the NSEL scam exposed. MCX refused to comment on the development.

Shrimi Choudhary