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Biggest IPO, Bigger Surprises: This Is Where I Sold NIFRA

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Nepal Infrastructure Bank Limited (NIFRA) had issued 8,00,00,000 units shares to the public, of which 0.20% of the total offered shares were set aside for the employees of the company and 5% for mutual funds. The remaining 7,58,40,000 units were for the individual public.

When the shares of NIFRA were listed in NEPSE, the opening range was set from Rs. 113.62 to Rs. 340.86 for the first transaction. The stock traded on the exchange for the first time on February 14, i.e. on Valentine’s day.

The shares opened at their upper limit of Rs. 340 under the sector Development Banks. Within a matter of minutes, trading of a handful of shares took the stock 10% higher. While writing this, NIFRA has been recategorized in the category “Investment.”

According to my personal research, stocks tend to reach their first peak about a week after listing. The stock then goes on a correction for quite sometime before the uptrend continues (if it is a good company). Thus, it is wise to sell on this first peak and rebuy the shares at a cheaper price later.

In perfect agreement with my research finding, NIFRA’s stock gained and hit 10% positive circuit breakers for 7 consecutive days. Since the volume of buy orders was significant, I was not so concerned about selling it soon. The stock went as high as Rs. 726 per share.

However, on the eighth day, NIFRA first hit a 10% positive circuit breaker. As if out of nowhere, sell orders began to hit the TMS. Within a matter of minutes, the stock lost and hit a 10% negative circuit breaker. I did not even witness all this happening when it happened. Shit escalated quickly. Ykwim?

The next day, everything was messed up in NEPSE. There was a technical glitch in NIFRA’s share price and the dashboard showed that NIFRA had a stock price of Rs. 0. I knew this was impossible, since NEPSE puts circuit breaker after a stock hits 10% gain or loss, and the stock can’t rise or fall further. This anomaly in NIFRA’s price affected the NEPSE index itself. For unaware investors, this was a panicky moment. Since NIFRA’s IPO had attracted a lot of newbies, I can imagine how they must have felt.

Anyways, NEPSE fixed the whole thing and the shares of NIFRA were resumed for trading. I sold my 50 shares allotted in the IPO at Rs. 555 per share.

Given that I was allotted the 50 shares in the company’s IPO at Rs. 100 per share, I am a happy man with my profit. Now, the stock can gain or lose after I sell but I will have no regrets. Anyways, after the exhaustion of the first wave of optimism, a company’s share price takes a considerable amount of time to push upwards. Furthermore, since supply is heavy in NIFRA’s shares (every IPO applicant was allotted 50 shares minimum), I speculate that this excess supply will resist the price from gaining.

I can be wrong, though. I couldn’t care less about this. My broker is sending me my entire sell amount today. Hashtag “Feeling rich” with 16 others, buddy.

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