One of the questions I am having is the demand for new listings. For an instance, the recently listed Bimputh Lanka (BLI) shares saw a rapid growth in the first few days; from an introductory price of Rs. 10 upto a high of Rs. 120, constantly achieving about 50% increase daily. Now it has settled somewhere around Rs. 60.
My question is; why did it go up by about 50% everyday for about 3-4 days? I mean, it is understandable if the price just skyrocketed on the opening day and stayed there. Is there any rationale behind such a price rising pattern?
(My initial guess was that since the company has a comparatively low number of shares - around 20 million - and there were so many interested investors, the demand for the shares could not be fulfilled and so the initial buyers sold their stocks on the following days at very high prices. Is this correct?)