Reason for the Rally of : Indiabulls Real Estate Ltd [NSE:IBREALEST]
The company's board approved share buyback at a price not exceeding Rs 90 per share in November 2016. This was after the company's market price fell sharply from Rs 96 in October to Rs 60 in November.
The company bought back 34.05 million equity shares for Rs 272 crore. The promoters' stake in the company increased to 50.92% from 47.50% earlier. The company closed the share buyback offer on 10 April 2017.
The stock started to rally after the buyback closed. On 12 April, the stock closed with gains of 8% at 98.65. Open Interest on 12 April was 2.53 crore shares in the futures segment.
The stock came out of the F&O ban period on 13 April as the total open interest (futures and options) dropped below the market-wide position limit on 12 April.
Market-wide position limit (MWPL) is expressed in number of shares. It is the lowest of the two -
a. 30 times average daily turnover or
b. 20% of the free float equity.
The exchange publishes MWPL for each stock every month. The MWPL for Indiabulls Real Estate for the current month is 5,01,02,626 shares.
A stock goes into F&O ban whenever total open interest goes above 95% of the MWPL. Once in ban, trading is allowed only to square off positions. Nobody can open fresh positions during the ban period.
Now here comes the interesting part...
The stock came out of the ban period one day before the company announced its restructuring plans. This may have given stronger hands a chance to accumulate the stock.
The open interest in the futures segment spiked from 2.53 crore shares on 12 April to 3.9 crore shares on 13 April.
The above chart shows the concentration of futures and options positions. The exchange publishes the number of clients holding positions more than 3% of MWPL for each stock.
On 13 April, 57.82% of the MWPL in the stock was held by twelve clients. This means that stronger hands had entered just before the announcement.
As the stock went up on 17 April, the stronger hands decided to book profits and exit the stock. Open interest in the futures segment dropped from 3.90 crore shares on 13 April to 2.35 crore shares on 17 April.
So that's my view on the 40% jump in Indiabulls Real Estate.
The company bought back 34.05 million equity shares for Rs 272 crore. The promoters' stake in the company increased to 50.92% from 47.50% earlier. The company closed the share buyback offer on 10 April 2017.
The stock started to rally after the buyback closed. On 12 April, the stock closed with gains of 8% at 98.65. Open Interest on 12 April was 2.53 crore shares in the futures segment.
The stock came out of the F&O ban period on 13 April as the total open interest (futures and options) dropped below the market-wide position limit on 12 April.
Market-wide position limit (MWPL) is expressed in number of shares. It is the lowest of the two -
a. 30 times average daily turnover or
b. 20% of the free float equity.
The exchange publishes MWPL for each stock every month. The MWPL for Indiabulls Real Estate for the current month is 5,01,02,626 shares.
A stock goes into F&O ban whenever total open interest goes above 95% of the MWPL. Once in ban, trading is allowed only to square off positions. Nobody can open fresh positions during the ban period.
Now here comes the interesting part...
The stock came out of the ban period one day before the company announced its restructuring plans. This may have given stronger hands a chance to accumulate the stock.
The open interest in the futures segment spiked from 2.53 crore shares on 12 April to 3.9 crore shares on 13 April.
The above chart shows the concentration of futures and options positions. The exchange publishes the number of clients holding positions more than 3% of MWPL for each stock.
On 13 April, 57.82% of the MWPL in the stock was held by twelve clients. This means that stronger hands had entered just before the announcement.
As the stock went up on 17 April, the stronger hands decided to book profits and exit the stock. Open interest in the futures segment dropped from 3.90 crore shares on 13 April to 2.35 crore shares on 17 April.
So that's my view on the 40% jump in Indiabulls Real Estate.
Comments