Know the sector wise average price difference in percentage of the auction shares of last 2 years

An auction market is a market in which investor bids competitive price for unclaimed right shares or any other shares sold in auction by the companies. Generally, the unclaimed right shares will be auctioned to the general public at Rs 100 and above, but only those investors who bids highest or equal to cut-off auction price will get the shares at the auction. Looking at the earlier trend, it can be said that the cutoff will be near to the market price. Most probably the cut off price will be around 10-20% less than the last trading price of the auction closing day. Here is the sector wise average price difference % between cut-off auction price and auction closing date price whereas auction data taken from 2015-07-10 to 2017-09-17 except Development Bank Sector data which is only from the year 2017 as there are many auctions to be fit in the diagram. Note: The sector wise % indicates there is the chance to get an auction shares, if someone bids a price equal to auction closing date price deducting with the particular sector wise % of auction closing date price. For e.g. The Chances of Auction Bids Price = Auction Closing Date Price – (Auction Closing Date Price x Sector Wise Average Price Diff % )   BANKING SECTOR Note: The average price diff % excluded the -ve data of Prabhu Bank as it is halted at that time as well as the data of Everest Bank which is irrational.   DEVELOPMENT BANK SECTOR Note: The average price diff % excluded the -ve data of Siddhartha Development Bank as it is halted at that time because of merger process with Janata Bank.   HYDRO POWER SECTOR   FINANCE SECTOR Note: The average price diff % excluded the -ve data of Guheyshwori Merchant Bank Fin Limited and Shrijana Finance Limited (SFFIL). SFFIL trading is halted at that time.   HOTEL SECTOR   INSURANCE SECTOR Note: The average price diff % excluded the -ve data of NB Insurance Company Limited as its market price was very low than market trend at that time.   MICRO FINANCE SECTOR Note: The average price diff % excluded the -ve data of First Microfinance. At conclusion, the auction cut-off price depends on many factors among them sector is also a major one, therefore the average price difference percent varies according to the different sectors. In an auction, investors should try to bid as low as possible. If the market is in bearish sentiment, then the investor might have the opportunity to grab shares at low price.  Bidding around market price or more than the market price is never sensible. There is a huge chance that many investors will bid more than what is considered an optimal bid price. Bidders should never bid more than the market price. It is sensible to wait until the second last day of the auction, then bid 15-20% less than the final closing price. Bidding more than the market price only makes the company richer, not its shareholders. On the other side, the important part of the auction is not to get the auction share, the auction cut-off price should above market price when the auction share listed and credit in ones demat account.

• Deep Thapa (Nepal Stock Data Analyst)