Anil Ambani-controlled Reliance Power Ltd’s (RPL) announcement of bonus shares for investors did the trick for the stock on Monday, at least for the time being. According to dealers, another reason for the spurt in the stock price was short-covering in the derivatives segment. The open interest in the company’s stock futures (current month series) reduced by around 3.26 lakh shares to 77 lakh shares. The stock futures for the February series was trading at Rs 410, a discount of Rs 3.95 from its spot price. The stock, which had witnessed an unimpressive listing and drew flak from irate investors ever since its debut on February 11, surged to Rs 413.95 on Monday, posting a gain of Rs 29.45, or 7.66 per cent, from its previous close of Rs 384.50. It is still, however, trading below the issue price of Rs 450.The company had announced on Sunday possible bonus shares for all non-promoter investors, and that the ratio of bonus shares would be decided at a board meeting on February 24. However, despite the announcement, analysts and the broking community are on a wait-and-watch mode. Motilal Oswal Securities vice-president, portfolio manager and equity strategist Manish Sonthalia said, “The announcement of bonus shares is a corrective step aimed at lowering the cost for retail shareholders, especially after the poor listing on the bourses. The true consequences of this will be understood only after the ratio of bonus shares is announced. But, definitely, liquidity will increase in the counter. An offer of 1:5 would still not be covering up the losses of the investors as the stock has reduced by more than 20 per cent since listing. Also, a 1:1 ratio seems unlikely.” Some experts also believe that the announcement is a “soft” way of telling investors that the issue was overpriced. Some others say it is a strategy to keep disgruntled investors happy ahead of the next IPO — of Reliance Infratel —from the Reliance Anil Dhirubhai Ambani Group (R-ADAG). The bonus announcement didn’t seem to do much for the other R-ADAG stocks. With the exception of Reliance Communications, all other group stocks ended the day in the red.
