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 The Equity Desk Forum :Market Strategies :Fundamental
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smartcat
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Quote smartcat Replybullet Topic: Insider Information - Informed Intelligence!
    Posted: 01/Oct/2007 at 3:55pm
Reliance Energy was a stock that was flying under the radar for many years now. Suddenly, it started moving from Rs. 500 to Rs. 1200 almost vertically. Only after that did the news come out - that Reliance Energy is coming out with India's largest IPO ever.
 
Obviously, people in the top management (insiders) deliberately or unintentionally leaked this information to certain investors. Either that, or the merchant bankers let their top customers know about this beforehand.
 
Whatever it is, this sort of insider information really helps a set of investors - those with connections and those with a big purse. Our own member Ritesh's brokerage house knew about NIIT Tech's PE deal beforehand. So obviously, this kind of insider information leaks happen quite often.
 
So perhaps Efficient Market Hypothesis theory is relevant - that the price of a stock already reflects all known/unknown news and information


Edited by smartcat - 01/Oct/2007 at 3:58pm
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catchsudipto
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Quote catchsudipto Replybullet Posted: 01/Oct/2007 at 4:37pm
those with connections and those with a big purse
-------------------------------------------------
 
I have also heard about it many times. But I always try to avoid those kind of news ( bad or good) and may be missing many oppertunities. But i am happy to miss those.Smile
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smartcat
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Quote smartcat Replybullet Posted: 01/Oct/2007 at 4:45pm
Ideally, I would have liked Rel Energy's management to announce on TV that they are planning to come out with an IPO, as soon as the idea was conceptualized. This kind of information dissemination will level the playing field a bit. 
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s_praharaj
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Quote s_praharaj Replybullet Posted: 02/Oct/2007 at 1:10pm
This I think is a tactics of the management to price their shares high in IPO. They leak the news, take the price to a great height and price their IPO accordingly. ICICI Bank also did the same thing. If we can find out, persons close to ADAG group might have cornered the stock.
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basant
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Quote basant Replybullet Posted: 02/Oct/2007 at 1:55pm
Best thing to watch out would be Reliance MF holdings for August -  September 2007! Did kela get the bananas before any one else?
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monu_duggad
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Quote monu_duggad Replybullet Posted: 03/Oct/2007 at 7:47pm

Basantji

He is smart enuff not to keep any holding of Rel energy in his Mf lest he provocate Damodaran...

You think Rel energy share went up like rocket without the knowledge of insiders ....obviously some merchant bankers (and there are host of them if u take a look at there DRHP which they filed today) would have leaked the story to there institutional clients obviously after front loading....and then market lapped it up with both hands....with retail guys being the last to join the party to capture the last 5-10 % of upside...

funnier thing to understand is....how come nobody knew of this impending ipo of rel power ...i mean this entire process of selecting merchant bankers etc takes long time..so markets shud have got a whiff of it long back...i mean its not possible to just come out with info on ipo and then in 2 weeks BINGO...the price is up 100 %...i am sure people in the top management would have known about this ipo atleast six months - one year back...wud be interesting to check there (friend's,relative's etc) demat accounts ;)

anyways everyone knows that the entire group is a chor (with due respect to the wealth that they have created)..so wht one can do is..participate in that newsflow and earn whatever one can :-)...

Mr Marathon is buying 1.4 crore shares in the ipo...wht he wud have done is...loaded himself up with Rel energy at 500-600 Rs...leaked the news of ipo now....sold of his shares at 1200-1300....and use this money to subscribe to the 1.4 crore shares of Rel power...
 
can anyone enlighten me....tell me any country where a corporate house can run his own asset management company ?

while we are at it...look at Rel Cap....with the way price has gone up 14 % on monday...am sure there is some news coming on it...with privileged few having got smell of it  already....

hamam me sab nange hain especially when we have such a lax and teethless regulator who unearths scams only in hapless stocks like Ballarpur etc....thats why its easier to move Indian markets at the whims and fancies of few operators and corporates ....
 
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monu_duggad
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Quote monu_duggad Replybullet Posted: 03/Oct/2007 at 7:56pm
And yeah....market is abuzz with the talk that...Marathon bought Rel energy shares with the help of P-Notes :-)...
 
Interesting thing is...nobody in the brokerage space has the guts to come out with "Sell" report on Reliance group shares...(Citi did a week back..put sell on Rel Energy at 1100.....and lost out in the Rel Power ipo where all and sundry has been given the mandate..who knows..perhaps they came out with sell cos they havent been given the mandate :-) )...even at 1804 ...no one will ask u to sell RCAP...when everyone knows SOTP for RCAP in fy09 works out to 1890 that too after assuming the most optimistic set of scenarios...
 
RPL..at 160...everyone is waxing eloquent on how he is running ahead of time and all that...but no one realizes ...we r giving it a market cap = market cap of (bpcl+hpcl+iocl) without producing a drop of oil....and same set of people were saying..."u know...till dec 08 ..RPl wont move much from its ipo price"...
 
RNRL...what can one say about it...
 
time has come...where ambani just announces he is getting into xyz
business...and market is ready to reward with 10-15 billion $ mcap...
 
~ i dont have any reliance shares.....u can say its the case of "Sour Grapes"
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kulman
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Quote kulman Replybullet Posted: 03/Oct/2007 at 8:18pm
Monu jee
 
That's a nice observation: nobody in the brokerage space has the guts to come out with "Sell" report on Reliance group.
 
Perhaps Dhirubhai's memories (of early 80s) still haunt brokerages!!!
 
By the way, you seem to be very regularly irregular on TED! Busy? Clean-up your PM inbox.
 
 
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