After a long hiatus of nearly 19
months, primary market is
once again buzzing with activities, as a host of IPOs look set to tap
the market in the near future. Already fireworks were seen on the Dalal Street
as investors lapped up shares in the state-run NHPC, which hit the primary
market in August 2009. The issue was oversubscribed more than 23 times, as
market participants cheered the first major disinvestment of UPA 2.0. Now all
eyes are on the IPO of the petroleum giant Oil India Ltd., which is set to hit
the market in September 7. With the latest Budget's renewed emphasis on
the government's disinvestment program, more PSUs could be expected to hit
the primary market. Besides, a clutch of new issues are lined up from the
private sector that includes names like JSW Energy, Great Eastern Energy, and
realty major BPTP. So far this year, only five new issues, including
Mahindra Holidays and Excel Infoways, tapped the market, raising $707.1 mn,
according to the research firm Dealogic. However, the primary market is expected
to witness hectic activities in the coming months, as about 44 new issues,
including some big-ticket IPOs like BSNL, UTI Asset Management, Air India,
OIL, and RITES, besides some banks in the public sector and Anil
Ambani-owned Reliance Communications among others from the private sector, are
expected to hit the market soon to raise a huge
Rs 77,500 cr, as against just about Rs 22,000 cr tapped through this route
in 2008, according to Thomson Reuters.
The revival in the market sentiment is attributed to improved liquidity
scenario in the domestic market and continued buying by the FIIs, which
are back this year with a bang and have helped revive investor sentiment.
Foreign portfolio investment in the country crossed $7.3 bn, as on July 31, 2009,
as against the net outflow of $11.9 bn in 2008, while the number of FIIs
registered with the Sebi has gone up from 1,594 to 1,679, during the said
period. Hitesh Agarwal, Head of Research at AngelTrade, observes, "The recovery
in global sentiments, improvement in liquidity and the return of the risk
appetite amongst investors have all lead to vibrancy coming back to the
secondary markets and consequently the primary markets." He adds, "Further,
considering that India is a growing economy and companies constantly need capital
to grow, they were just waiting for an opportune time to raise capital
wherein they could get a fair value for their companies." The successes of first,
Adani Power, which was oversubscribed by 21.64 times, and NHPC, which
has been the largest IPO issue so far in India, do suggest that the risk appetite
of investors has improved tremendously since last October when the global
financial crisis hit investors hard. The current enthusiasm clearly
indicates the revival in the sentiment among the investors. The ongoing capital
market reforms too have played their part in boosting investor confidence in
equities. Several measures towards boosting liquidity and investor protection
have helped revive the IPO market. For instance, after making IPO grading
mandatory two years ago, the market regulator, in another significant move,
recently issued a guideline introducing the concept of `anchor investor'.
Further, Sebi has taken various initiatives to promote and boost trading in the
primary and secondary market like
revising the existing fee structure by 50% for the entry of intermediaries
like brokers and FIIs, and also has scrapped the entry loads on
mutual funds. |
