The much hyped Reliance Power IPO story has come to a Red end.
Opening at a nice Rs 530/- issue price, it was dragged down, by the bears and people with a sense of urgency to get rid of the stock, that were alloted - which was bought on credit.
See the math.
The application money was 25% of issue cost Rs 450 * 225 = Rs 1 Lakh.
Margin money paid = Rs 25,000/- @ 19% interest PA, costing the total investment Rs 396.
Alloted shares at Rs 430 for retail investers @ 15 shares = 6450.
Nett refund = Rs 18550/-, effective - Rs 18154, after interest.
So cost of acquisition is ( 6450 + 396 ) / 15 = Rs 456.4.
So to break even at sale, the investor should have sold at Rs 461 per share. But see what price it closed at? Rs 376/- an effective loss of Rs 85 per share or Rs 1275 in an investment of Rs 6846, which means a whopping loss of 18.62%. Not bad for a days trade? And a months wait?