If the secondary market is on fire, the primary market is trying to play a catch up, seeking to capitalise on the rally driven by foreign institutional investors (FIIs). As many as 11 companies have lined their initial public offerings to raise a total of Rs 3,495 crore in the week that began on Monday.
This is however not a green light for investors to line up for these IPOs, as the markets are entering dangerous territory and valuations overall are getting stretched with every day’s rise in markets, experts say.
“The investors will have to be very selective as lot of these are small companies. They should wait for the government divestment that may come up next month,” said a market expert who did not wish to be named.
The size of individual IPOs vary from a high of Orient Green Power’s Rs 900 crore to Gallant Ispat’s low of Rs 40.5 crore.
How much of the FII inflow gets into these IPOs is to be seen. Fund flow from FIIs has concentrated in the secondary market so far in September. Of the net investment of Rs 14,158.6 crore by FIIs this month, only 1.4 per cent or Rs 197.9 crore has gone to the primary market.
Some say this sort of line up for raising money from the primary market is one of a kind.
“This will be the busiest week in the Indian primary market history after 1995. Even during the red-hot bull market of 2007, no single week featured 11 IPOs,” said Jagannadham Thunuguntla, equity strategist at SMC Global.