Street Signs: Microcaps under microscope, double-edged deal, and more

Avendus Spark Institutional Equities narrowly sidestepped potentially disruptive error in Clean Science and Technology block trade, as investment banker was acting as buyer and seller, sources said

Last week delivered two stark reminders that microcap investments remain one of the market’s least-patrolled borders, and investors should proceed with caution. First came a three-minute clip from GKB Ophthalmics’ virtual annual general meeting — with a market capitalisation of less than ₹84 crore — in which a lone shareholder, holding a single scrip, grilled management for weak performance and underperforming peers despite decades of experience. On the same day, Securities and Exchange Board of India Chairman Tuhin Kanta Pandey warned mutual funds against overexposure to microcap stocks and excessive buying of illiquid, low-quality debt. Same sandbox, two distinct wake-up calls.

 

Double-edged deal: One misstep could cut deep

 

Avendus Spark Institutional Equities narrowly sidestepped a potentially disruptive error in the Clean Science and Technology block trade, as the investment banker was acting as both buyer and seller, sources said. An input mistake triggered the sale of just over 30 per cent of the company instead of the intended 24 per cent. Because the trade entered the open market, the extra 6 per cent could have been acquired by third parties, making cancellation nearly impossible and exposing Avendus Spark to litigation with the promoter, the Boob family. Sources said that since Avendus Spark controlled both sides of the transaction, it immediately neutralised the oversized sale with a matching buy order. Exchange data show 32.21 million shares — 30.32 per cent — were first sold and then repurchased. A corrected order for 25.48 million shares (23.98 per cent) was subsequently executed at ₹1,080 apiece, raising ₹2,750 crore. Although neither Avendus Spark nor the Boobs suffered trading losses, the stock exchange may still impose penalties on the investment bank.

 

Walking the invisible line of compliance

 

Market regulator Securities and Exchange Board of India (Sebi) supports individuals who provide stock market education. However, the boundary often blurs between education and offering specific advice or stock tips. Sebi has previously taken action against those who crossed this line. Earlier this month, Sebi conducted searches related to Avadhut Sathe, a self-styled “successful trader” who guides people on navigating the market. In a video circulating on social media, Sathe appeared defiant while acknowledging Sebi’s visit to the Karjat residential learning facility. He observed, “We do not provide any advisory services. We are fully cooperating with the authorities and will continue with events and sessions on schedule. There is absolutely no change.”