The application supported by blocked amount (ABSA) scheme played a big role in the Coal India Issue. As the merchant bankers think 75 to 80 per cent of the money put in by the foreign institutional bidders came through this route. As we saw the data of NSE Nifty data, FIIs have put in subscription worth 1.1 lack crore for Coal India Issue. Most of the money has come through the ABSA route for Coal India. Institutions have been putting in money through the ABSA route for quite a few issues now. But Coal India has been the largest issue since the time it became mandatory for QIBs to invest 100 per cent up front for public issues. Since May institutional investors need to reserve the entire application money upfront (unlike earlier when they used to pay just 10 per cent of application money), retail investors are still not familiar with ABSA and there are a number of reasons for this. One of them being that their brokers is not pushing the ABSA as they are supposed to .Through the ABSA route; the brokers are not involved in the issue. The banks get the brokerage which is why many brokers do not support the ABSA. Visit us http://www.stockinvestmenttips.in
In the early days following the IPO, there is a high illiquidity in market for the stock. Market timing becomes difficult and short-sellers might find it difficult to borrow stocks from big shareholders. There are also chances of big price declines because of highly active short-covering by traders when the initial short-interest for the IPO fades. Similar selling-activity can also occur at the end of the lock-up period when large shareholders can sell their holding. Visit us http://www.stockinvestmenttips.in