MC Inside Edge: HNI gatecrashes institutional block window, Wockhardt, Dr Reddy’s bulls struggle, F&O on FinMin radar

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The second coming

This well-networked HNI based out of suburban Mumbai, who was active during the dotcom boom of 2000 and then abruptly vanished from the scene, has made a quiet comeback. His name has been figuring in some of the major block deals of late, Cipla and ITC being the notable ones. What has set tongues wagging is that this HNI has been figuring among the bidders in the block deal window at 8:45 am, which is meant for institutional investors only. Usually, individuals who participate in block deals flip the positions the same day, but this HNI appears to be in it at least for the near term, if not for the medium or long term.

Daunting task

Operators in the Dr Reddy’s stock appear to be getting repeatedly wrongfooted by some foreign funds booking profits in their ADR positions. Trading volumes in the ADRs have been higher than usual for the last couple of weeks now. Every attempt to take the price higher has been met with selling in the ADR market, which then widens the gap between the domestic share price and that of the ADR. Not much going in favour of Dr Reddy’s fundamentally at this point, but operators seem to have taken a leaf out of the playbook of value investors: the good time to accumulate a stock is when nobody wants it.

No follow-up

Some savvy Mumbai-based HNIs who had taken up big positions in Wockhardt a few months ago are also sweating it out. The recent fund raising and some positive news flow on the promising antibiotics in the pipeline was expected to trigger a rerating of the stock. But things have not gone to plan. For one, the fundraise itself was smaller than what the company had been hoping for. Two, there has been no incremental news flow on the antibiotics in the testing phase.

FM’s shot across the bow
The big boys of the F&O market are jittery about Finance Minister Nirmala Sitharaman’s recent remarks on derivatives trading during her visit to Mumbai. Seasoned traders fear that the FM’s comments on ‘unchecked explosion in retail trading in F&O’ is a prod to SEBI to do something about it and the regulator is likely to act on it. Chatter is that is could be one of the three: increased lot size, or a derivatives certification course, or a minimum equity exposure against which the F&O trades can be shown as a hedge. The last one in particular is what market participants are most worried about.