The Hindu Business Line : Primary market can see good harvest: Experts

INDIAN primary market, which mopped up over Rs 15,000 crore in the recent past, has the capacity to mobilise more funds as it continue to attract more institutional investors, say primary market experts.

According to Mr Ashok Kumar, CEO Lotus Strategic Consultancy (a primary market monitoring firm), "there is enough demand for the new issues due to enough depth in the primary market".

In the recently concluded public issues — both by private and public sector companies — most of the demand came from the mutual funds and foreign institutional investors. The heavy demand from them mainly contributed to the huge oversubscription of these issues. Even in the case of country's biggest issue ONGC (over Rs 10,500 crore), retail portion was under-subscribed while the overall issue was oversubscribed 6.5 times.

Prime Database, an independent primary market monitoring agency, feels that there are several issues lined up in later part of the year. Some of the issues that could hit the primary market this year include BPCL, Haldia Pertochemicals, Mahanagar Gas, Power Finance and Power Grid. Private sector issues including TCS, AB Corp, NTPC, Set India, Shopper's Stop, Thomson Press and UTV are also likely to hit the market.

"There has been good demand from investors for companies which have good track record and are profit making and this trend would continue," said Mr Prithvi Haldea of Prime Database.

Mr Kumar feels that there is good demand for public issues and the government in the next phase of disinvestment can raise double the amount it mopped up in the recent issues.

Brokers said most of share offers have given good returns to investors on listing. For instance, the IPO of Power Trading Corporation (PTC) provided returns of 175 per cent on listing and returns from Biocon issue was almost 85 per cent.

"When investors makes good returns on listing they are lured for further investment and this is being witnessed in the primary market," said a broker.