When Meera Sanghavi was allotted 16 shares of Reliance Power in India's biggest-ever initial public offer, it seemed a windfall for the middle-class housewife, who hoped to double her money in less than a month.

Instead, she sold her shares in panic on Monday as the newly listed stock tanked. She lost 7 percent of her investment and will think twice before applying for shares again.

This is a big loss for common people like me who had lot of expectations from such a big company, 49-year-old Sanghavi told Reuters.

Reliance Power, which raised $3 billion in the world's largest IPO this year, attracted bids worth $190 billion from over 4 million investors when it opened for subscription in January, just days before stock markets worldwide went into a tailspin.

Shares in billionaire Anil Ambani's Reliance Power plummeted 17 percent by the time the market closed.

I got scared when the price started going down, Sanghavi said. Even the name of Reliance did not take the shares up.

Reliance Power has no operating assets and is not likely to report strong profits for five years.

But the extraordinarily high subscription to its IPO demonstrated not only the extent to which middle-class Indians have bought into a stock market bull-run of five years but also their faith in the Ambani family name.

The Reliance group, founded by the legendary Dhirbhai Ambani, is divided between his sons: Anil, who has interests in telecoms, financials, media and power; and elder brother Mukesh, who controls India's top listed firm, oil and petrochemicals giant Reliance Industries Ltd.

Despite a public spat between the brothers, which saw their late father's empire carved up in 2005, the family has a reputation of implementing large projects on time and rewarding shareholders.


Ambani said just before the stock's trading debut that long-term shareholders would reap rich rewards.

At a listing ceremony in the Bombay Stock Exchange's auditorium, once the bourse's trading floor, he called the debut date auspicious and noted it was the birthday of his wife, Tina, a former Bollywood star.

But for Jigu Bhatt, a retail investor, it was anything but a lucky day. After struggling to sell his Reliance Power shares in the sinking market, he told Reuters: I just did not get a chance to sell as the moment one would call the broker to sell, the price would have fallen further.

The newly listed utility is not alone. Top government-run power producer NTPC Ltd, which has 28,000 megawatts of operating plants and plans to another 50,000 megawatts in two years, has seen its shares fall 35 percent in the weeks since their early January peak.

And the benchmark index itself , which shed nearly 5 percent on Monday, has tumbled almost 22 percent since hitting a record peak of 21,206.77 points on Jan. 10.

Two IPOs were shelved last week after poor investor take-up and concerns they might fall at their debut.

Everyone on the other side of the counter is selling, said Raj Bhandari, director at Networth Stock Broking Ltd.

Investors are selling Reliance Power because this is perhaps the only way they can hold on to liquidity, after all it has corrected only a little compared to the losses in other big stocks in their portfolio, Bhandari said.

India's 10 biggest IPOs ever include three from companies controlled by the Ambani family, whose business empires include one of the world's biggest refineries and India's No. 2 mobile services company.

Analysts said small investors will now have to look beyond the brand name and check the valuations before investing.

Until now investors were putting money like crazy in IPOs and were making money in each and every IPO, said Deven Choksey, managing director at brokerage K.R. Choksey.

Now they are trapped.

(Additional reporting by Manoj Dharra in Mumbai; Writing by Himangshu Watts; Editing by Louise Ireland/Charlotte Cooper)