Where are we today? The Maruti IPO has been a win-win situation for all the Government, company, promoters, investment bankers, and, of course, investors. The huge response to this IPO and the significant gains upon listing are bringing a renewed confidence to all constituents of the capital market. This event, along with success of bank IPOs, is being heralded as the revival of the primary capital market. We should, however, recognize that all these IPOs received good response as there was a huge `safety' factor associated with PSUs, and also because of deliberate underpricing by these issuers. So, are we really on the revival path?

The expectation that a buoyant secondary market may just pull the primary market out of its rut is becoming popular. Although belied on many occasions before, it is gaining popularity again courtesy the present bull run. However, the link between the two sub-sectors of the capital market has never been as straightforward as it is generally presumed. The structural issues connected with the two have been different. The investor profiles of the two are also different. The impact of capital market reforms and regulations has been different on the two. Some of the key factors propelling the ongoing surge in share prices such as FII inflows are not immediately relevant to the revival of the primary market. The primary market has had certain unique problems that neither the policy nor the regulations have been able to redress. It would be naïve to think that the primary market could be kick-started by any development, however significant it may be for some other part of the capital market. The issues affecting the primary market have to be addressed separately, and comprehensively.

Regrettably, the manipulators may exploit this bull run, like in the past. In such times, a small investor is generally driven by price, rather than by value. We are already a witness to rigging up of the share prices of hundreds of small `penny' companies. In the last three months, the shares of many of these companies, mostly with poor fundamentals, have recorded price increases of between 200 and 2000%!

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