Bulls knock out bears in Akruti thriller

Futures Short-Sellers Trapped By Surge In Price

AFTER a long time, Dalal Street is witnessing a fierce tussle between bear and bull traders. The scene of action is the Akruti City counter, with the stock surging to new highs over the past few days. It soared 11% to close at Rs 2,227.50 on Thursday, amid heavy volumes, as the bulls appeared to be moving for the kill.
    According to market talk, some players who short-sold Akruti March futures have been trapped by the upswing in prices. They have been frantically trying to cover up their positions over the past few sessions, sending prices of the stock and its futures higher.
    Akruti's share price has more than doubled since the beginning of futures and options contracts' March series, with brokers attributing the spectacular rise to the battle between the two camps. The real estate sector, in general, has had a dismal run over the past one month, barring this week, when there have been signs of renewed buying interest at lower levels.
    On Thursday, the National Stock Exchange (NSE) said it would exclude the Akruti stock from the F&O segment after the expiry of the March series. Outstanding contracts in the April-May series will also expire on March 26, the last day of the current settlement cycle. The exchange did not specify any reason for its action. NSE has also placed the stock in the trade-for-trade segment with effect from March 27. Bears to carry forward their short positions
THIS means that no trade in the stock from that day can be squared off; every trade will have to compulsorily result in delivery. Brokers say the stock could see volatility on Friday too.
    "Some of the smaller investors may sell Akruti shares on Friday, worried about regulatory actions. But it is very likely that the selling will be absorbed by the bull cartel, as it would want to keep the price firm till expiry," said SP Tulsian, a market analyst. The bear group is said to consist mainly of a Mumbai-based trader and a couple of foreign institutional players.
    The bull camp is said to be a led by a Mumbaibased operator who holds a sizeable stake in the company through his investment firm. Brokers say this operator is being backed by powerful players, without whose support he would not have been able to sustain the price. Of the company's equity base of 6.67 crone shares, the promoters own 90%, nearly 6% is held by corporate bodies, and the rest by the public. The low-floating stock is said to have made it easier for the bulls to trap the short sellers.
    A few months back, Akruti's promoters had raised money by pledging shares with a couple of non-banking finance companies. Initially, it appeared that the promoters were finding it difficult to repay the loans. This encouraged bear traders to go heavily short on the stock from January, hammering the price all the way down to around Rs 550.
    To the bears' misfortune, the promoters are said to have repaid the loans and redeemed the shares. Suddenly, the bears found themselves trapped, as they realised they would not be able to square off their positions without pushing prices up. They decided to carry forward their short positions, hoping that the price would cool down because of the bearish outlook on the real estate sector in general.