Despite the slowdown concerns Indian capital market has shown resilience as companies have raised more money through initial public offers (IPOs), follow-on public offers (FPOs) and debt offers in the first half of the current fiscal than the same period last year.
Companies raised around Rs 13,600 crore from capital market from April to September this year, while the amount raised during April-September 2010 was around Rs 13,250 crore.
"Fund raising have been more this year because of debt offers such as non-convertible debentures (NCDs) and bond issues," said Rikesh Parikh, vice-president at brokerage and research firm Motilal Oswal Securities.
As the volatility in stock market increased and slowdown became more apparent, companies started lining up debt offers, which offer safety for investors. Of the total seven debt offers in the past six months, six hit the market in August and September.
In the current fiscal, companies have raised around Rs 4,000 crore so far through NCDs while in the first six months of previous financial year only two companies came with debt offers and raised Rs 970 crore.
"Volatility in equity market has dried up the risk appetite of investors. Money went into the debt offers is of investors who do not want to park their money in equities due to volatility and prefer comparatively safe instruments such as NCDs and bonds," said Prithvi Haldea, chairman and managing director, Prime Database.
Also last year's figures are less because most of the mega issues hit the market in the second half of the year. IPO of Coal India (Rs 15,000 crore), FPO of Power Grid Corporation (Rs 7,400 crore) and Tata Steel (Rs 3,400 crore) and NCD of State Bank of India (Rs 5,500 crore) hit the market in the second half of the year.
However, going ahead will be difficult for the capital market due to volatility in the stock market. During 2010-11, companies raised around Rs 58,000 crore through IPOs, FPOs, bonds and NCDs. "The second half of current fiscal is expected to be comparatively dull season in terms of public issues hitting the market as slowdown concerns have dented the investors sentiments," said Sunil Jain, vice president- equity research, Nirmal Bang Securities.
"We will not be able to match the last year's figure of Rs 58,000 crore," he added. Going forward investors are waiting the public issues of ONGC, IOC and rights issue of State Bank of India.