Movers and shakers
Dalal Street is never short of conspiracy theories on days of big market moves. It's no surprise then that Thursday’s sudden U-turn in the benchmark indices is still being hotly debated. The popular theory was that on that day the unexpected drop had been caused by a fat finger trade. Meaning a dealer punched in a wrong quantity to sell, which sent other algos in the system into a tizzy. But since no fat-fingered dealer could be found, another theory is gaining currency, that the fall was triggered by some large foreign fund or a group acting in collusion, who stood to make huge gains from their weekly options positions if the spot market fell. Murmurs of this kind of manipulation have been doing the rounds for a while, just that they have gotten louder of late.
For a few dollars more
Chatter is that the relisting of Reliance Naval Engineering shares will be the next trigger for the Swan Energy stock. The allotment process is over, but the listing of shares right away is not a given, this diarist learns. That is because the insiders believe that the true valuation of RNEL is much higher and that a regular relisting around the same price it was delisted at, will take a long time for ‘fair value’ discovery. Hectic parleys are on to see if there could be some workaround. Most institutional investors have already loaded up on the stock. New believers will start coming in only once the RNEL shares get listed.
New-age operators
Some of the PMS funds seem to be taking a leaf out of the books of market operators. These funds have been taking significantly high stakes in small and micro caps, which make them almost a strategic investor and not merely a portfolio investor. The advantage for the PMS is that it can control the float in these companies and keep pushing the price higher over the next 12 months so that by the time the year draws a to a close, the high valuations of these stocks will help the PMS charge a higher fee under the profit-sharing arrangement with its investors.
Retail tide
A financial services firm which loves to ‘sit tight’ on investments has been baffled by the near one-sided rise in stock price over the last months. Friends and associates of the firm’s management pestered them for the reason behind the sudden demand for the stock. The puzzled management then checked its register of members (shareholders) to see which big ticket investors were behind the rally. It was in for a surprise again, because there were no fund houses or large individual investors who had increased exposure to its stock. Just a mob of retail investors who seemed to have taken a sudden fancy to the stock.
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