Reliance Power goes below issue price; Early signs of bear market!

Investors were expecting Reliance Power to perform better in weak stock markets. But, the markets haven’t even spared Reliance Power. The stock listed at Rs. 530 compared to issue price of Rs. 450 and soon touched a low of Rs 386.

Reliance Power touched a high of Rs 530 and a low of Rs 386. The stock traded at an average price of Rs 432 (lower than issue price) till 10.30 a.m.

Investors were expecting high returns from Reliance Power. The Reliance Power IPO was most successful in Indian markets. The issue received a tremendous response from retail investors.

Power Sector was looking very promising. Stock market analysts suggested that Reliance Power may list around Rs 800 – 900. But after the stock market crash in second half of January, investors were cautious. Most Stock experts revised their target for RPL listing in the range of Rs. 500 – 650. However, the stock couldn’t sustain at higher levels in weak stock markets.

The loss in Reliance Power will further dampen investor confidence. Stock markets reacted in early trades. NSE Nifty was touched a low of 4975.

Anil Ambani said recently that long term investors will gain if they remain invested in Reliance Power. Anil Ambani was little concerned about the recent volatility in the stock markets.

Big percentage of Retail Investors has lost interest in stock markets. This was evident from the failure of initial public offers from Emaar MGF and Wockhardt Hospitals. Many IPO plans were postponed by companies due to weak stock markets.

The question which bothers every retail investor is “Are we already in a bear market?”

The signs are indicating a start of bear market. The US recession fears have caused massive erosion of investor wealth. Most of the stocks have lost big percentages from their 52-week highs. The high volatility indicates panic in the markets. Failure of many IPO offers signal a low interest from retail investors. FIIs have been net sellers in past many trading sessions. Indian mutual funds were buying in some select counters, but they couldn’t help the markets to sustain.

Portfolio Manager Mr. Jayesh Gandhi at Morgan Stanley said that their fund is bullish about Indian markets. He expects markets to touch a new high in 2 – 3 years. This may mean that the stock markets may deliver positive returns over a long period, but short term outlook is negative.

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