Billionaire businessman Anil Ambani will be the centre of attention on Monday morning, not just for India but perhaps for the stock markets worldwide, when he rings the opening bell in Mumbai to mark the listing of his group company Reliance Power at BSE and NSE.
The company created many records with its initial public offer just last month. With the market conditions having changed dramatically since then, its listing is being keenly awaited -- not only as a test of the investors' confidence in Ambani but also to help decide the future course of action in a highly volatile market.
This is the first IPO by the Anil Ambani group after the family settlement between him and elder brother Mukesh Ambani in June 2005. His another firm Reliance Communication which got listed at Rs 290 is currently quoted at Rs 646.10 on BSE.
As far as the IPO is considered, Anil Ambani is the last man standing in the stock market arena, with Reliance Power being the last successful major public issue across the world.
Having raised about three billion dollars though its public issue, the company has helped India become the biggest IPO market so far in 2008, with a total tally of 3.3 billion dollars.
<b1>This accounts for nearly half of the total global IPO proceeds since the beginning of 2008, which has seen close to 25 IPOs being shelved globally, including two in India last week. Since January this year, about a dozen of IPOs have been shelved in America.
Besides, turbulent market conditions have already seen India Inc lose over 100 billion dollars in terms of market value in 2008 and the bulls are now betting on a premium listing of Reliance Power to restore investors' sentiments.
However making the things worse, grey market premium has slipped to Rs 50-60 per share for the company as against Rs 450-550 till a few weeks ago when the IPO process was on.
Most of the market observers are foreseeing a listing at around Rs 500-600 per share and expect the stock to either extend the premium or slip into a discount as the day progresses, depending on the overall market mood.
"R-Power would decide whether a next trigger for markets can do something for the market while pressure of global markets might try to pull down sentiments," brokerage firm SMC Global's Vice-President Rajesh Jain said.
However, with close to 90 per cent being with promoters, those in the bullish believe that any major selling pressure was unlikely to be seen in the stock.
Besides promoters, FIIs are the second largest shareholder of close to 4.5 per cent, but they are also unlikely to start selling unless they are able to get a good premium, taking into consideration the interest costs incurred by them and no discount having been offered to them during the allotment.
An investment banker said that going by the huge over-subscription, there could be significant demand for the shares when it enters the secondary market on Monday. The IPO garnered a whopping Rs 7.52 lakh crore as against the needed Rs 11,700 crore and was subscribed in less than 60 seconds.
"If the listing goes anywhere below Rs 550, retail investors would be highly disappointed which could lead to pandemonium in the market. Also if the scrip falls below issue price, then the overall market could also fall sharply," Arun Kejriwal of Kejriwal Research and Investment services (KRIS) said.
The first sixty seconds would again be crucial for the company as Ambani gives the opening bell and sees his company's share list on bourses on Monday.
But the challenge would be to sustain the share price above the offer price of Rs 450 and offer a reasonable profit to people who have invested in the IPO. Considering that the landscape of Indian financial market has changed dramatically since his IPO, it could be a tough call, said a broker.
"Every strength of the group will be tested on Monday, considering that the sentiments are down, markets are volatile, grey markets premiums are practically absent and there are enough forces that will make every effort to push the issue price down," said another broker.
It would be interesting to note the strategy of bears in the market who would want to cash in on the downward trend and hammer the stock on the first day.
Reliance Power IPO had witnessed a grey market premium of Rs 450 at the time of launch with market speculating that the issue would open around Rs 900-950 and close around Rs 750-800.
However, with markets correcting sharply, these premiums now eroded to Rs 50-100 with practically no trades. There are even guesses, though remote, that the issue may go below the offer price.
"Its time to test Anil Ambani's stamina, not on his jogging track, but on bourses. He has been a master of this game and lately practising hard, lets see the outcome" said an investor.