Buoyant IPO mkt may not hurt secondary mkt
MUMBAI: The initial public offering (IPO) market is strengthening, and firms have hit the market with nearly ₹26,000 crore of fund raising through this route, and even with a stronger pipeline in the offing, market strategists aren’t too worried this would divert the attention away from the secondary market, which is hovering near record highs.
Surging secondary market, had encouraged many companies to hit the equity market for raising capital, as they can demand better valuations, with the huge interest from investors.
The Sensex rose as much as 0.73% on Monday to record a new high of 32508.06 points. For the year to date, it has gained 21.77%.
A few say this will even attract more flows into the market, because of renewed interest.
“It won’t affect the markets adversely as more money will come in,” Neelkanth Mishra, India equity strategist at Credit Suisse, said in an interview on Wednesday.
As many as 18 companies have hit or announced their IPO raising dates so far this year, with fund raising from such IPOs totaling to ₹25,903.02 crore, data from primary market tracker Prime Database showed.
An additional ₹46,470 crore of IPOs are lined up, data showed. Among those lined up, General Insurance Corp of India, National Stock Exchange of India Ltd and HDFC Standard Life Insurance Co. Ltd—are biggest issuances and are expected to raise around ₹10,000 crore each.
According to Credit Suisse, IPOs issuance in FY18 is likely to 35% higher than the peak seen in FY08. However, it adds that since most of the issuance is to be for financials or for government divestment, the immediate impact on economic growth will be limited. “I don’t think the secondary market will be impacted. Any good opportunity – a good company with good price is likely to attract strong flows,” said Prithvi Haldea, founder and chairman of Prime Database,