Mining away the gains ; esurgere Mines and Minerals and Austral Coke & Projects, which operate in the out -of-favour commodities space, recently had a spectacular debut on the stock markets. The spectacular rise & fall of two mining stocks raises hackles.

These are bad times for new listings, as any market analyst worthhis name will tell you; and it's even worse for companies from thosesectors that are decidedly in a downturn. Yet, Resurgere Mines andMinerals and Austral Coke & Projects, which operate in the out -of-favour commodities space, recently had a spectacular debut on thestock markets. On the day of listing, the stock prices of Resurgereand Austral Coke rose over 100 per cent and 50 per cent,respectively.

Many investors couldn't help but curse themselves; they couldhave easily got the share of these companies in their initial publicoffers (IPOs) as these issues were barely subscribed. After gainingfurther over the next couple of days, the Resurgere stock slid backalmost 70 per cent and was quoting below the issue price of Rs 270per share.

Austral Coke was in better position, losing just 18 per cent fromits all-time high of 308; at the time of writing it was stilltrading above the issue price of Rs 196 per share. So, what explainsthe stunning success of these two IPOs at a time when the overallmarket sentiment was low and the commodities space an absolute no-no? Resurgere Mines is into mining of iron ore and bauxite andAustral Coke is into manufacturing coke and refractories, and bothfeed sectors like steel, cement, aluminium that are in a downturn.

According to market sources, the spectacular rise and fall in thestock prices of these companies was due to the fact that just a fewplayers held most of the shares and they could move the stock priceat will. This happened as the retail portion of both issues wasundersubscribed, and as a result, institutional and high net-worthinvestors were allotted most of the shares. When the shares of acompany are in a few hands, it is very easy to control the stockprice, says a dealer with a domestic broking firm. Dealers say theshare price of Resurgere was pushed higher it went as high as Rs 740at one point to make a killing. When some people started selling theshares, the price was further pushed up again, luring them to covertheir short positions, which led to a further rise. After the shortcovering was over, selling started again but this time there were nobuyers and as a result the stock price fell sharply.

If market whispers are to be believed, both the Bombay StockExchange and National Stock Exchange have sought details frombrokers on buyers and sellers in the shares of these two companies.Till the time the stock exchanges are able to prove there wassomething fishy about the whole affair, we can ponder over thestrange ways of the market. Virendra verma