Ranbaxy Labs to remain under pressure

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Ranbaxy Labs to remain under pressure

Ranbaxy Labs will remain under a bit of pressure in the near-term, it might drift down closer to Rs 450 or sub-450 levels too over the next few days once the offer is done. The residual value probably could be around that Rs 450 mark.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See what other CNBC-TV18 anchors have to say Nifty BSE | NSE 25/05/12 Are Mutual Funds betting on Nifty?

CNBC-TV18s Managing Editor, Udayan Mukherjee - The trade in Ranbaxy Labs , which people were playing for on Tuesday did not quite work out, which was that the futures and the cash market price did not converge as expected. But today is the last day of the offer and we now hear that both Life Insurance Corporation of India (LIC) and General Insurance Corporation (GIC) after making some noises to the contrary are going to tender their shares. It means that the acceptance ratio goes down quite significantly, which is not good news for the stock price in the near-term.

So everybody who is tendering will now work out the math and figure out that everybody is tendering. So their ratio of stocks, which are accepted, is not great. That probably means that the stock will remain under a bit of pressure in the near-term, it might drift down closer to Rs 450 or sub-450 levels too over the next few days once the offer is done.

The residual value probably could be around that Rs 450 mark but since the ratio is a bit weak and the stock might drift. One should remember that there were hopes in many quarters that the Ranbaxy secondary market price will dart towards Rs 650-700 where the deal is getting done or closer to where the deal is getting done but not only as that not happened, the stock has been stubbornly in that Rs 500-550 range and now seems to be coming off.