Why Didn’t I Get Allotment in Yes Bank FPO: A Optimistic Perspective
Receiving news that you did not get allotted shares in the Yes Bank FPO can be a mixed feeling. However, this news can also be seen as a beacon of hope for the future performance of the stock. Understanding the reasons behind the initial low allotment and the potential future movements of the stock can provide valuable insights for investors.
Overview of the Initial FPO
The banking sector witnessed an interesting scenario in the context of the FPO (Rights Issuance) by Yes Bank. The bank aimed to raise capital, but at valuations that were significantly lower due to the stock price being at Rs.26–27. Therefore, the FPO was offered at a much lower price of Rs.12–13 per share. Despite this reduced offering price, the issue remained under-subscribed. Underwriters had to bring in large institutional investors to help meet the subscription targets, ultimately leading to the FPO price being set at Rs.12 per share.
Implications and Rejoicing Over Not Getting Allotment
To many, not receiving shares in the FPO may initially seem like a disappointment. However, there is a good reason for rejoicing. The fact that the FPO was not fully subscribed indicates that the market perceives the current share price as undervalued. This signals that the stock price might revert to or fall close to the FPO issuance price in the near future as new shares enter the market.
Possible Stock Price Movements and Market Trends
Observing the stock's performance on July 23rd, it can be noted that the stock dipped into a 20% lower circuit but closed slightly above it at Rs.14.75. For a 20% lower circuit on July 24th, a further drop to Rs.11.8 is possible, which is nearly aligned with the FPO listing price. If the lower-circuit filter was revised to 10%, the price could fall to a maximum of Rs.13.3 on the same day. This suggests that there is a strong potential for the price to reach or come close to the FPO price by then.
Further analysis is important, as it highlights that the fresh set of shares are expected to come onto the market on July 27th. Consequently, the current market dynamics can predict a decline in the stock price to the FPO level by the time these new shares enter the market. This situation not only highlights the under-subscribing reality of the FPO but also presents a potential buying opportunity for astute investors.
Conclusion
Not getting allotted shares in the Yes Bank FPO can be seen as a positive sign for the future. The unwarranted allotment and the subsequent low price reflection of market sentiment can lead to a price correction to the FPO level. Investors who missed out on the FPO may find this as a re-entry opportunity. Always stay informed and keep a close eye on market trends and stock performance for strategic investment decisions.
Frequently Asked Questions
1. What are the implications of not being allotted shares in the FPO?
Not being allotted shares in the FPO can be seen positively as it indicates an undervaluation of the stock. This means that the stock price might revert to or fall close to the FPO listing price in the near future as new shares enter the market.
2. How can I predict the future movements of the stock price?
Monitoring market trends, observing lower-circuit movements, and considering the entry of fresh shares into the market can help in predicting future stock price movements.
3. When is the next potential buying opportunity for Yes Bank shares?
Absent a major reversal, the next potential buying opportunity may arise as fresh shares enter the market on July 27th. Investors should wait for the market to reflect these new supply dynamics before considering re-entry.