The Hindu Business Line : Primary market raises Rs 17,665 cr this fiscal

WITH stock indices touching their all-time high levels this year, the primary market has created a new record in the history of Indian capital market by raising over Rs 17,500 crore in the current fiscal through public issues of equity shares. The previous highest amount raised through public issues of equity was in 1994-95 when companies raised Rs 13,312 crore.

According to Prime Database, an independent primary market monitoring agency, in the current fiscal around Rs 17,665 crore would be raised through equity and hybrid instruments (like warrants to be converted into equity at a later date) compared with the previous high of Rs 13,312 crore in 1994-95.

A large portion of the amount raised in the current fiscal was through offer of sale, mainly by PSUs, rather than fresh issues of shares.

According to Mr Prithvi Haldea of Prime Database, "It is true that the highest amount has been raised from the primary market in the current fiscal. But it's an aberration that primary market has revived as most of the issues were for offer for sale."

Under a normal bull market, after the rise in the secondary market, companies tap the primary market to raise funds to meet their capital expenditure.

He said until funds are raised for capital expenditure and retail investor coming back in large number, "we cannot say that primary market has revived."

The difference between the boom of 1994-95 and this fiscal is that the previous boom in primary market was mainly by retail investors, but this time more than 50 per cent of the funds raised was by institutional investors, mainly FIIs.

Mr Haldea said, "Retail investors are still cautious while investing in the primary market." Even to the government's disinvestments programme, the retail investors' participation was lukewarm as seen from the ONGC public offer where the retail portion was under-subscribed.

"Low retail participation was due to crowding of the public offers in a very short period of time and unattractive pricing," Mr Haldea added.

According to Prime Database, several issues are lined up in the next fiscal, as over 600 companies are likely to raise Rs 60,000 crore. Some of the issues lined up include those from PSUs like BPCL, Haldia Petrochemicals, Mahanagar Gas, Power Finance and Power Grid. Several bank issues and a host of private sector issues from AB Corp, Daksh, Datamatics, Hutchison, Idea, NTPC, Set India, Shopper's Stop, TCS, Thomson Press and UTV are also lined up.