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Primary momentum overflows

india Updated: Jan 04, 2008 20:33 IST
Primary momentum overflows

Initial Public Offerings (IPOs) hit the market thick and fast as key indices at the Indian stock markets reverberated to the beat of bulls through 2007. If one included the follow-up public offerings (FPOs) in the primary market, the funds raised would approximate over Rs 40,000 crore during 2007.



With an estimated tally of over 100 IPOs and FPOs having hit the market during 2007, it is surely going to be a tough act to follow in 2008.



However, given the impressive line-up and pipeline for the first quarter of this calendar year, an encore and even a betterment, cannot be ruled out.



The primary market theme in 2007 revolved around realty and infrastructure companies. The big-ticket IPOs that hit the market included DLF, HDIL and Power Grid. Of the three, Power Grid was clearly the most attractively priced, as has been the case with many PSU IPOs—remember Maruti Udyog?



Some of the relatively lower profile IPOs that went on to grab the secondary market spotlight included Vishal Retail, MIC Electronics and Everonn.



The high profile loser of 2007, primarily on account of gross over-pricing of its IPO was House of Pearl while fundamentally shaky IPOs like Transwarranty and Broadcast Initiatives bit the dust, post-listing.



Herein, one must call the bluff behind the brain-dead advise that some so called 'experts' are doling out to investors, suggesting that every IPO be subscribed to and sold on listing.



Well, playing 'Russian roulette' might give investors lapping up such gibberish an even greater high, albeit with similar consequences.



Furthermore, wealth is created by holding on to the fundamentally sounder stocks and those who sold the likes of Infosys, Opto Circuits, Divi's Labs and more recently, Lanco Infratech on listing might well be rueing the day they did so.



Looking ahead, the pipeline for 2008 appears extremely solid, with the likes of private sector companies like Reliance Power and Emaar MGF in the queue alongside PSU behemoths like Oil India, NHPC and Air India. SBI's mega-rights issue too promises to be interesting.



With the Indian markets on a roll and PSU valuations getting closer to being commensurate with their sheer size and potential, a little resolve and gumption on the part of the Congress party that heads the UPA coalition Government, could transform 2008 into a year of PSUs in the primary market.



Even otherwise, the momentum from 2007 is strong enough to ensure that enough mega issues from both, the private and public sector, hit the market hard and fast during the first three months of 2008. Thereafter, the forthcoming Union Budget proposals could hold the key to the way forward.



The author heads Lotus Knowlwealth and can be contacted at

ceolotus@hotmail.com