Thursday, August 9, 2012

Indiabulls Infra Stake Hiked by Morgan Stanley

Rajiv Rattan,
Executive Vice-Chairman,
Indiabulls Infrastructure &
Power Ltd.

By Ram NN, Assistant Editor:
Thursday, 9th August 2012, 09:44 PM IST:

Indiabulls Infrastructure & Power Ltd (BSE: 534597, NSE: IBIPL) counter in BSE, on Thursday witnessed a significant buy of 1.01 crore shares by the FII, Morgan Stanley Asia (Singapore).

The deal was disclosed at Bombay Stock Exchange after Thursday’s trading hours.

StockExplain News had earlier reported on the first identified buy by this Morgan Stanley arm on last Wednesday. The stock has since then shot up by an impressive 33.55%, which has happened within a week’s time.

Buying the stock, however, has been somewhat difficult during past sessions due to Indiabulls Infra hitting the Upper Circuit soon after commencing trade.

But on Thursday, the stock broke free from the Upper Circuit for a brief period in early morning trade before getting locked again in a 5% UC.

Thursday’s brief dip, was most probably caused by a strong bearish trend prevailing in all Indiabulls Group stocks, due to a recent strongly-worded research report against the conglomerate.

For the last two trading sessions, except Indiabulls Infra, all other group stocks like Indiabulls Real Estate, Indiabulls Power, Indiabulls Financial Services, Indiabulls Securities, & Indiabulls Wholsesale Services were either closing in red or struggling much to close in green.

The out-performance of Indiabulls Infra vis-à-vis other group stocks is largely due to its perceived low price, its recently listed status, and the fact that being a new scrip it is still under Trade-to-Trade or ‘T’ Segment where intraday trading is not allowed, which might allow better price discovery despite increasing volatility.

Whereas Morgan Stanley’s earlier buy amounted to a 0.51% stake in the company, its Thursday buy amounts to a further 0.79% stake, taking its total stake to a significant 1.3% in this holding company of Indiabulls Power Ltd.

Thursday’s buy had no identifiable counterparty sellers, offloading more than 0.50% stake. This was unlike on last Wednesday, when Morgan Stanley’s buy was against an even larger sell by Fidelity Investment Trust Fidelity Series Emerging Markets Fund.

However, it is highly unlikely that it was non-institutional or retail investors who sold massively on Thursday, as there was a 3.5 times volume jump in BSE alone, and the more probable scenario is that two or more institutional investors sold stakes less than 0.50% each.

As StockExplain News had reported earlier, though the long-term prospects of this scrip is dependent upon the project completion capabilities of Indiabulls Power, in the short-term it continues to be a momentum play.

Indiabulls Infra stock has completed 9 trading sessions in T Group as on Thursday, and Friday’s session might be its last one in trade-to-trade segment, before being shifted to any of the normal groups where day trading is allowed.

The market will be keenly watching whether the scrip can hold its ground, even outside of T Group.

A reasonable level of profit booking is inevitable as since its listing at Rs. 4, Indiabulls Infra has already run up more than 54% within 10 trading days.

The scrip has a high FII holding of 34.32%, while its promoter holding is at 32.41%. DII holding is quite low at just 0.21%, while non-institutional or retail holders own the remaining 33.06% of the company.

On Thursday, Indiabulls Infra closed trade at Rs. 6.17 in BSE, which was the same rate at which Morgan Stanley bought the additional stake, by pumping in Rs. 6.24 crore.