Readings: Brokers & IPOs, Alternative investments, Insider buying in sugar
- Business Standard: Brokers go all-out to woo IPO investors
Stock brokers are providing incentives to the retail investors to subscribe to Reliance Power’s (RPL) initial public offer (IPO) on their behalf. For every application where shares are allotted, brokers will pay Rs 7,000 to the retail investor. The amount would be paid over and above the cost of shares allotted.
But, what has induced stock brokers to extend such an incentive to retail investors? According to one school of thought, apart from creating a strong demand for the IPO, brokers stand to make handsome profits without making any investments.
Consider this: estimates by stock brokers, determined by the grey market premium of Rs 500 a share, indicate that RPL stock would list above Rs 950 against the issue price (upper band) of Rs 450 on the bourses.
- Economic Times: Alternate investments turn attractive
. . . there are a quite a few investors who are increasingly looking at alternate investments such as art, art funds, gold Exchange Traded Funds (ETFs), agri and non-agri commodities, vintage cars, rare stamps, antiques, wine, photography, sculptures, and private equity.
The ET Art Index has fallen 12% in the year from 2615.7 in July 2006 to 2295.1 in July 2007, though from January 2007 (ET Art Index = 2998.2) the fall is more than 40% annualised. Year on Year (YoY), the index is down 7.9%, currently quoting at 2777.22. One of the reasons for art under-performing is that the guidelines and regulations are still being strengthened in these new investment avenues.
- Business Standard: Sugar barons ramping up shareholding
With their stocks struggling, the country’s top sugar barons are ramping up their shareholding in their companies. Companies such as Balrampur Chini, Dhampur Sugars, Simbhaoli Sugars and Dwarikesh Sugar are all issuing warrants to their promoters which, on conversion, will give them a higher stake.
Though share prices of sugar companies have started rising in the last month or so, these had crashed almost 50% in the previous 12 months thanks to the fall in sugar prices resulting from record sugar production.
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