A cartel, led by Mumbai-based operators, is using old price rigging tactics to shore up the stocks of certain recently-listed companies. These operators are targeting companies that raised around Rs 50-100 crore in the primary market.
Their modus operandi is simple: use dummy retail investors to corner a majority of the shares offered to the public and then rig the prices.
Several Ahmedabad-based stock brokers are playing a key role in arranging dummy investors. The 'investors' apply for their full quota of shares. After allotment, they transfer the shares to the accounts of the brokers fronting for the operators in exchange for a 2.5 per cent commission.
Earlier, retail investors used to subscribe to the primary issues that enjoyed a good premium in the grey market. However, the grey market has come to a standstill after punters lost heavily in the Reliance Power IPO.
A look at the stock prices of the newly-listed issues reveals a curious trend.
The stock of Niraj Cements and Structurals, which got listed on June 19 at an issue price of Rs 190, has gained 20 per cent even though the Sensex has slumped nearly 10 per cent during the period.
Take the case of Anu's Laboratories. The company got listed on June 4 at an issue price of Rs 210. The stock jumped more than 100 per cent within 10 trading sessions to touch a high of Rs 468.90 on the Bombay Stock Exchange.
Not more than 3.77 million shares, constituting 31.63 per cent of the fully-diluted, post-issue paid-up capital of the firm, were offered to the public. In this case also, the stock soared even though the Sensex fell from 15,514 to 15,087.
Sources familiar with the developments said the contrarian trend of these stocks will attract greedy investors.
At this point, the operators will start exiting slowly, making handsome returns on their investments.
In this context, the fall in the price of Porwal Auto is curious. The stock, with an issue price of Rs 75, touched a high of Rs 120 within hours of listing on January 14. However, as on June 27, it has fallen 85 per cent from its high to close at Rs 19.
© 2025