Street signs: Micro-caps feel pinch of curbs, Netweb GMP above 65% & more

PSUs, served hot: Share sales curry favour with investors

In June, the central government successfully offloaded nearly Rs. 4,200 crore worth of shares in Coal India Limited (CIL) in what was this financial year’s first major disinvestment. The share sale had seen more demand than the shares on offer. It is fairly common for state-owned institutions, such as Life Insurance Corporation (LIC) of India, to place large bids during government disinvestment. However, this time, it was different. The latest shareholding pattern released by CIL shows LIC’s stake in the country’s largest miner remaining static at 11 per cent before and after the offer for sale. It goes to show that the share sale witnessed genuine demand from investors. “The sentiment towards the public sector undertaking (PSU) pack has turned positive. Given the attractive valuations, some investors are willing to bet on PSU stocks. The government should use this opportunity to forge ahead with its disinvestment programme. At the same time, it should ensure that the operational performance of all PSUs improves,” observes an investment banker.

Micro-caps feel the pinch of trading curbs

Mercury Ev-Tech (formerly Mercury Metals), a BSE-listed company with a market capitalisation (m-cap) of Rs. 420 crore, has moved the Securities Appellate Tribunal (SAT) for relief against the enhanced surveillance measure (ESM) framework. The company has stated that the imposition of ESM Stage II — which permits trading in the stock only once a week — has rendered its scrip illiquid, triggering losses to the company and investors. While placing the matter for hearing on July 25, SAT directed BSE to submit its response by July 21. The ESM framework has been introduced by stock exchanges and capital markets regulator — the Securities and Exchange Board of India — to curb volatility and possible manipulation in small- and micro-cap companies with an m-cap of less than Rs. 500 crore. Several entities have raised concerns over the issues and challenges with the new framework.

Grey market sees colour: Netweb GMP above 65%

The grey market premium (GMP) for Netweb Technologies, India’s largest manufacturer of supercomputing systems, is hovering above 65 per cent. The Delhi-based firm’s Rs. 630 crore initial public offering (IPO) opens for subscription on Monday. The issue comes at a time when listing-day gains for the last three IPOs have been between 30 per cent and 93 per cent. Also, the recently included IPO of Utkarsh Small Finance Bank, which mopped up 100x subscription, is expected to list at more than 50 per cent premium. “There’s a frenzy in the IPO market amid buoyancy in the secondary market. So far, the GMPs have been a good indicator of how the IPO will go. However, one needs to be cautious. In the past, we have seen the sentiment take a turn for the worse after one or two poor listings,” says a broker.