POWER STOCK: RELIANCE POWER AND AFTER

Many investors walked through the Dalal Street and many an event happened in the background after the mega IPO of Reliance Power. It was an epoch making issue, investors of all hues ignoring all boundaries made it a point to invest in this offer. The power sector is the most happening sector right now and in the days to come, it held out much promise. In one of my earlier blogs (link) I discussed the issue as I was sure the issue will be a block buster and only a few will repeat its performance in future. I am still bullish in power sector in Indian context. (Earlier Popular Blogs link1, link2)

It is still a mystery what followed just prior to and after listing of the issue. We saw the melt down of Indian stock market, pundits tried to find out reasons, and as usual it is always easier to find the exact reason after any mishap. Post mortem report-"weak global cues". But interestingly some HNI and Institutional investors off loaded their holding of the issue just like a hot potato from their hand.

All of a sudden, few pundits suddenly discovered power stocks in India are over valued; so far we along with the same set of pundits were over optimistic in this sector. Now, many small investors panicked and sold off their holdings.

It seemed to me as a well orchested event that followed one after another in a systematic way. Whatever it may be, but it was successful, many small investors who invested in the issue with their hard earned money and some even with borrowed fund sold off their holdings and incurred heavy loss.

Should we pass on the blame to the promoter of the issue? Probably not, ADAG tried their best to allot shares to all small investors, (fifteen, sixteen shares) we are not complaining.

But the recent positive news of bonus shares, to make up the loss of investors, is laudable. The news also boosted the stock link. With this particular small gesture ADAG showed how they care for their investors. It also shows that they are bold enough to admit that may be their pricing of the stock was high.

Will it be very high expectation for the small investors to have such gestures from the houses of repute in future? May be ADAG set a high standard to emulate for all business houses.