Tuesday, April 17, 2012

MT Educare Sees Continued Selling by Merrill Lynch

Dr. Chhaya Shastri, Director, MT Educare Ltd
By Special Correspondent:

Mumbai headquartered education player, MT Educare Ltd (BSE: 534312, NSE: MTEDUCARE) on Tuesday, 17th April 2012, witnessed continued selling by the FII, Merrill Lynch Capital Markets Espana SA SV for the second consecutive day, which was also the fourth day after its IPO listing.

On Tuesday when the FII offloaded its stake there were no identifiable buyers, unlike on Monday, when noted individual investor and entrepreneur Ashish Kacholia was there to buy an identical quantity, which was reported by StockExplain on Monday.

Merrill Lynch sold off 3 lakh shares of MT Educare on Tuesday, in a deal carried out on Bombay Stock Exchange, as revealed by data published by BSE after trading hours.

On Monday, the FII had offloaded 3.01 lakh shares, probably picked up by Kacholia, who is also known for his business connections with ace investor, Rakesh Jhunjhunwala.

There were enough peculiarities in today’s trade. Due to being in Trade-to-Trade category, MT Educare’s circuit limits in BSE were today fixed at Rs. 103.20 and Rs. 93.40. The scrip opened significantly down at Rs. 94.80, thereby triggering panic that it would be soon frozen in Lower Circuit.

A close look at the volume chart for Tuesday reveals that bulk of Merrill Lynch’s sell must have happened in this panic. Whether it’s sell caused this panic or it sold off during the panic period is not clear. At BSE, the FII’s sell volume accounted for nearly 45% of the total volume traded for the day in the counter.

But the scrip narrowly escaped the LC trigger of Rs. 93.40 due to strong buying support and steadily gained  ground to touch Rs. 100, which is also its 4-day or all-time high, by noon. But it couldn’t go still higher and touch the Upper Circuit level of Rs. 103.20, nor sustain at Rs. 100 for long due to high selling at those levels, and soon slipped back to the early morning lows of Rs. 94. 

But again, the buying support kicked in, and the scrip could close with only a small loss of 0.36% in BSE at Rs. 97.95, while in NSE it even managed to close with a tiny gain of 0.20% at Rs. 98.60.

It is strange that Merrill Lynch’s average sell price is Rs. 94 on Tuesday, even while the scrip could erase most of its losses twice during the day, and close almost neutrally. Together with the fact that all trades are in delivery-only mode during the first 10 days, this shows that there is enough buying support at low levels.

However, what will happen in the coming days, will depend much on the sell volumes coming into the market. While today’s volume of 3 lakhs by Merrill Lynch could be effectively consumed, a higher volume by any major sellers can indeed cause a lower circuit.

Evidently, the bulls and bears are closely fighting it out in the counter. StockExplain had earlier reported that Prof. Shivanand Mankekar, the noted academician-investor had bought a hefty 2.25% stake on Thursday when the scrip had listed after an IPO that was oversubscribed by 5 times.

Though fundamental valuations and technical parameters clearly point to a correction in the short-term, investors in the counter will be watching whether MT Educare can pull off another rally.

Merrill Lynch raised Rs. 2.82 crore using Tuesday’s sell.

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