Here are 2 stories – there are about 1000 Indians who will be able to identify these stories even with complete change of names, initials, time periods. Of these about 10 read my blog, 20 know about my blog. So will tell you 2 stunning equity market stories. When you read this you will realize why I keep saying that if you are small, not well connected, and if you have made money in the market, you are lucky. Simple.

Story No. 1: A big company needs money so it places its equity shares with a few big FIIs. Real big numbers, stunningly high price and raises a lot of money. The FIIs have been spearheaded by one very big name – which is well known to most of you.  This is a FRESH issue and the owner’s stake is reduced – but not substantially. Deal brought to both sides of the table by one very big brilliant broker / wealth manager / – whatever you wish to call him.

After some time the big company needs more money. It goes to a very big consortium of Indian big shareholders and offers them FRESH shares. This is again the initiative by the SAME broker  who brought the FIIs to the company. Deal about to go through, one FII screams murder. Says ‘hey you are diluting the EARNINGS’.

Company and broker literally say ‘go hang’.

FII threatens to sell.

Now guess what the company and the broker did (answers tomorrow).

Second case:

A and B are 2 very good friends. They are brokers working out of 2 cities of India. They pick up equity shares in a company – the number of shares is in 8 digits – so please assume the size of the deal. For the story the size of the deal does not really matter much.

Share prices double. In their own net worth, the value of these shares should be about 2-3%, so really not very significant, but not insignificant also.

A realizes B is in some kind of financial trouble. B has bought some shares which had fallen in value – and worse he had shorted one share which had ballooned in price – against the trend of the market.

Now guess what A does. (answers tomorrow)

If you have been in the market since the 1980s chances are you would have been coming to the BSE building. Chances are you would have seen all of them. No further hints, no further comments. Do not bother asking what happened.

I will give the answers…soon…if not the next day as promised…

 

 

 

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  1. In first case I think it’s Bharti Airtel to me it doesn’t seem Coal India.

    And in second case I think its related to Ramesh Damani or Motilal Oswal.

  2. Story # 1:
    Company name: Coal India
    Broker: Uday Kotak?
    Big FII: Morgan Stanley
    FII that screamed: TCI
    What the company & broker did:Selected seven banks to manage the stake sale in Coal India which could raise $1.2 billion

    Guessing…
    Story # 2:
    Vasant Holding Private Limited (Motilal Oswal) and Deo Securities Pvt Ltd.(Ramdeo Agarwal).
    Both bought Hero Honda stock which doubled?
    Finally merged to become- Motilal Oswal Broking company?

  3. do u really expect a smart reaction from a PSU? thats appalling. Never, ever, never.

    I am not naming the brokers for sure, but hey how can it ever be these 2?

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