Case Study Of MCX IPO

2494 Words5 Pages

MCX IPO
MCX – About the company
Multi Commodity Exchange of India Ltd (MCX), the India based electronic commodity futures exchange was incorporated in 2003. MCX provides online trading services, clearing and settlement operations for commodity futures across India.
There are five electronic multi-commodity national exchanges in India including MCX, NCDEX, NMCE, ICEX and ACE and these accounted for 99.5% of the turnover of commodity futures contracts in India. MCX is the largest among these and have above 80% of the market share of the Indian commodity futures exchange industry.
MCX allows trading in more than 50 commodities across sectors like bullion, metals, energy, weather, and various agricultural products. MCX is the world's largest
Issue subscribed 54.13 times in total and 24.14 times in retail category
The IPO was oversubscribed 53 times as of 24th February. Retail investor’s portion was oversubscribed 4 times by 23rd February. This was first time that the retail portion in an IPO is oversubscribed before the qualified institutional investors (QIB) and non-institutional investors (NII). As mentioned by an investment banker, as the sentiment was bad for the IPO market and for the issue to sail through, they have intentionally left money on the table anf the price was kept low.

Post IPO

The sharp downward spiral the stock price had witnessed was because of external reasons and not because the stock had suddenly become less than investment-grade.
According to reports, there was a misconception that the FIIs were big traders in the MCX and if there was any large scale exit of the FIIs because of the twin issues of GAAR and the Mauritius Treaty, there would be a huge sell-off by them, leading to loss in value of holdings. This misconception of FII selling was a factor for the investors rushing to the exit door in so far as MCX was concerned. This might be one of the reason of falling stock

Open Document