Given the economic uncertainties, revival of primary market hinges on the bull run sustaining

Investors wary after burning their fingers in recent high-profile IPO

Despite a sharp rally in the major benchmark indices over the past two months, the primary market is still waiting for clear signals on the sustainability of the current bull run given the economic uncertainty.

Despite improving market sentiment, Inox Green Energy Services, Uma Converter, Radhe Developers and Nandan Terry Towel withdrew their initial public offering plans in the first quarter of this fiscal, while three applications to book-running lead managers have been returned. For an update on company information.

Around 63 companies have filed draft papers with SEBI this year, and another 71 companies that have got approval from the market regulator are waiting for an opportune time to tap the market. A total of 17 companies, including LIC, have raised around Rs 41,140 crore through IPO this year.

VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said most of the IPOs issued at fancy valuations are below their issue prices and the current market rally led by stocks with good earnings visibility is not enough for the revival of the IPO market.

After incurring huge losses in the recent four major IPOs, investors have become cautious and are unwilling to bet on listing gains. LIC and Paytm IPOs, which were priced at ₹949 and ₹2,150 per piece in IPOs, were traded at ₹686 and ₹772 on Friday, while the IPOs of Zomato and Policybazaar closed at ₹61 and ₹554 per share. ₹76 and ₹980.

Last year 63 companies raised a bumper of Rs 1,18,723 crore, while in 2020 only 15 companies raised Rs 26,613 crore.

abundance of hope

Nevertheless, three companies – Prem Vats’s Fairfax-backed Go Digit General Insurance, Rakesh Jhunjunwala-backed Concorde Biotech and Balaji Solutions – filed papers with Sebi this month to cumulatively raise ₹7,500 crore through an initial public offering. have been filed.

While Go Digit General Insurance and Concorde Biotech are looking to raise ₹5,000 crore and ₹2,000 crore, respectively, Balaji Solutions will raise ₹400 crore from capital markets.

Rajnath Yadav, Research Analyst, Choice Broking, said the secondary market is vibrant with moderation in inflation and resumption in FPI inflows.

“While this has raised hopes of a revival in primary market activity, we remain cautious about future momentum in equity markets given the uncertainty around geopolitical events and continued high inflation levels in key European markets,” he added. Remain optimistic.”

After withdrawing ₹2.17 lakh crore in the first six months of this year, FPIs have pledged ₹49,470 crore back since July. NSDL data shows that FPIs bought equity worth Rs 44,481 crore till August 19 and Rs 4,989 crore in July.

The main trigger for continued FPI buying in India was the continuous fall in the dollar index from above 109 at the end of July to around 105 recently. But on Friday, the dollar index rose again and crossed 107. If this trend continues, capital flows may get hit, Vijayakumar said.

Published on

20 August 2022


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