veranda learning : Veranda Learning listing: A lesson in arbitrage for investors D-St
In market parlance, arbitrage is the simultaneous buying and selling of the same stock on different platforms in order to take advantage of differences in the quoted price of the asset.
Player edutech was listed at Rs 157 on BSE, a premium of 15% over its issue price of Rs 137. On the other hand, it was listed at a discount of 9% at Rs 125 on the Exchange national (NSE) .
The price disparity on the two exchanges was quite large, around 25%, which was seen as a solid arbitrage opportunity by traders who planned to buy at NSE and sell at BSE, but the dreams were quickly shattered .
Market analysts said prices will approach equilibrium as the stock corrects on the BSE and moves north on the NSE, limiting arbitrage in delivery-based compulsive buying. .
Due to the auction volatility in the pre-opening session before listing, there was quite a large divergence between Veranda Learning’s price on the two exchanges, said Vikas Jain, Senior Research Analysts, Reliance Securities.
Since the company is listed in the “T” segment (trade to trade), it will take a few more sessions, say 3-4, for the stock to converge as it will rise on NSE and fall on BSE to match. prices, he added.
In smaller IPOs below Rs 250 crore in size, the certificate is listed in the “T” segment for the first 10 trading sessions, after listing. This means that intraday trading is prohibited in these counters.
Only investors who applied for the IPO and obtained a subscription could have sold the stock. Investors who bought the meter on Monday will only be able to sell the stock on Wednesday.
“It is mandatory to take delivery of the stock, which is only possible after two days of buying and in the meantime it will reduce the divergence between prices on the given exchange, limiting arbitrage opportunities for traders. traders,” Jain added.
However, experts could think of no other case with so many discrepancies in the near future. However, Veranda is no exception, they say.
Astha Jain, senior research analyst at Hem Securities, said she had never seen such a divergence in stock prices in the past. Based on fundamental analysis, she advised successful IPO investors to book profits on the stock.