IFCI :: from a multi bagger to a complete disaster

Hi Guys ,,,, some very dissapointing and heartbreaking news came in the evening ,,,, IFCI has rejected the offer made by Sterlite - MS and has called off the process of stake sale ,,, the Company is no longer interested in selling the 26 % stake and has ruled out any possibilities of a rebid.

The most dissapointing aspect is that after there being clear announcements that the deal would be clinched by today evening and the price fixed at ard 107 - 110 :: there was a complete U TURN from IFCI and this will definitely not go down well with the investor community.

This entire process raises quetion marks about the credibility of the company and the parties involved as they had built huge expectations around this event and the stock has risen 10 times in the last 8 months from 8 -10 levels to 115 levels ,,,,,

The most horrifying aspect of this is that IFCI has an open interest position of more than 9 crore shares in the futures market as per todays closing ,,,, indications from the grey market suggest that there are people ready to sell this stock at RS 75 but there are no buyers ,,,, optimistically assuming that IFCI opens in a best case scenario at around 70 -75 tomm ,it would result in a loss of RS 30 on a lot size of 7875 shares ,,, that comes to more than Rs 200000 per contract for people who are on the long side in futures on this stock

In addition to this many retail investors who felt that the strategic investor would come in at 107 -110 had bought this stock in cash market hoping for good returns on their investment in months to come ,,, they would have pretty much lost 40 -50 % of their capital by tomm evening ,,,,

I am not writing this because I am an investor in IFCI ,,, I used to hold IFCI but I had exited at RS 50 ,,,, The reason Im writing this is that there has to be something done to stop these malpractices and investors have to be more cautious and aware about the facts ,,,, first it was RPL which shot up to 295 and then down to 190 , later it was revealed that the promoters had sold 4 % of the equity ,,,, SEBI was said to be doing an inquiry and with time the issue has been suppressed because there are very big parties involved ,,, similar was the case with essar steel and so on ,,,,,

People have to be aware of the facts of each case and then take a fundamental call , not to get carried away with stary targets and keep booking profits at every level ,,,, In this case though the responsibility has to fall squarely on the parties involved in the entire process ,,,,, they have made a mockery of the public and the entire system ,,,, tommorow there will be lots of people who would have lost lakhs of rupees and their only fault would be that they trusted the statements released in the morning which said that the deal would be done by evening and the price had been fixed ,,,,

I hope peole read this article ,, I hope people understand that even though greed will always be a driver for all decisions in this market but every person has to assess his own risk taking capabilities and accordingly take a call ,,,, one shouldnt risk his peace of mind and his families safety just to make a quick buck .

Please post your replies and your opinions about this entire sham ,,, If you feel this article made a small difference in any which way then please post a small reply ,,, thnx

Thanks for your message and I also share your feelings. If one should stop giving importance to the news spread by medias like business tv and should analyse the fundamental of a company will keep him safe.

I am also holding some quantity of IFCI. Now what to do? Without any solid reason the management rejected the offer. Very bad. Thanks for the information.

Thank you Mr. irfab for your detailed message reg IFCI. It is indeed a very very disappointing development which is sure to create chaos in the stock mkt tomorrow. It will shatter dreams of people who bought futures in this stock. Certainly, IFCI has a lot to explain to the investors about this fiasco.
regards,
spkela

gud one.
but the fact is till the time markets will exist these things will keep on occuring.
there will be ppl who will not learn from mistakes.

dont go after glamour. All that glitters is not gold.

In the short term the news will not go down well and there will be a lot of selling pressure especially in the F & O segment ,,,, We all know how these guys function and maybe in a few days they might decide to revive the process or reach some consensus ,,, so hold on for some time ,,, I dont think they will let the story end so soon ,,, but in the short term it will be painful

Guys this again proves F&O can kill the investors. I really feel sorry for them. If you have bought IFCI in cash then no issues. Just hold and I would suggest to add more if it falls to 70 or 75 and keep adding in small qty at every decline. Don't dump it tomorrow just in frustration. The fundamentals of the company is not changed overnight without this stake sale going through. Their results last quarter showed that. IFCI has a long way to go from here. They are going to get banking license sooner than later. The way they are going about not using their land banks to clear their debts shows that they are probably of huge value and will appreciate over a period of time and hence they are reluctant to sell it off now. So take a 12 month view and invest in this scrip. Maybe tomorrow the same MS-Sterlite combo could bid at 200/share. Buy in small qty at every dip.

Well RPL story is different. The promoter did not make the RPL fall from 298 or so. It was the operators(funny one of the fellow who we call the warren buffet of India. I don't think Warren Buffet would have ever thought about shorting a scrip) who shorted this scrip left and right and created havoc amongst retail investors and made them dump at whatever price came their way and brought it all the way back. Infact the promoters would have been more than happy to sell the same 4% at 300 vs 224 if you were to think logically.

Hey Satish thnx for posting your opinion ,, I completely agree with u on the fact that they will not let the IFCI story end so soon , but in the short term there will be a terrible squeeze in the counter and it will leave many people burnt ,,,,

As far as the RPL story goes if u track the data closely during the 15 day peiod when this scrip rose and subsequently fell it will convince u that such massive volumes and such movement cannot be achieved without the collusion of the promoters / ineterested parties ,,,, RPL had a stock future limit of 18 crores in F & O and before this event the open interest in RPL used to be around 7 - 8 crores ,,,, but after this scrip rose beyond 260 -270 the open interest volumes jumped to more than 18 - 19 crores in a matter of days and it was revealed that there was a large group which was shorting RPL left , right and centre at every available rate ,,, if u check the data during this period RPL future rate was going at a discount of more than Rs 10 in the futures which has never happened in the history of the stock ,,,,, and after all the drama was over we get the news that the promoters sold 4 % stake at RS 223 ,,,,, they would obviously not sell evthing at the upper end since that wld almost be a confirmation 4 the regulators that the promoters are involved .

In any case they made sufficient profits shorting the futures and they wouldnt be too bothered about getting a few extra rupees on the stock that they sold in the cash market

Even invt experts like S.P.Tulsian and others have openly criticised the RPL promoters on CNBC . Think about it . The data is there 4 all to see but Reliance being a big name Im sure the regulators wont have the guts to question them .

ppl whatever you do please do not average down

thnx guys for posting ur views ,,,, people are welcome to share their opinions as im sure there are many people who would have traded in IFCI ,,, so keep it coming and share ur experience with all ,,, thnx