While the secondary market in India did spectacularly well to recover from the bear market lows hit in March 2009, the primary market was more or less subdued. Number of public issues in 2009 tumbled compared to the previous two years as companies were reluctant to try their muck despite the rebound in economic activity and the markets.
In addition, the companies that did decide to venture into the turbulent environment struggled to connect with the investors. What’s worse, their performance after listing left a lot to be desired, which aggravated the already tough conditions prevailing in the primary market.
As a result, public issues of big companies such as NHPC, Oil India, Adani Power, JSW Energy, Indiabulls Power, Pipavav Shipyard, Godrej Properties and DB Corp. received a tepid response. Investors were still wary of committing money in the wake of the previous year’s market meltdown.
However, there were a few bright spots in the otherwise gloomy scenario. Companies like Cox & kings, Infinite Computers and the most recently listed Jubilant Foodworks managed to escape investor apathy. The icing on the cake was when these companies backed up a strong performance in the primary market with an equally sparkling show on the bourses.
Last week’s poor show by NTPC FPO and Acqua Logistics IPO have brought back some of the disturbing memories of the bear market.
Retail investors have mostly given thumbs down to recent IPOs as market sentiment has once again turned weak after a prolong period of bullish phase. The sudden turn of events was particularly harsh on the NTPC FPO. The issue from the nation’s top power utility was subscribed only 1.2 times. Even that was largely due to support from public sector banks and financial institutions.
There are concerns that the recent fall in the market may also adversely affect upcoming FPOs of Rural Electrification Corporation (REC) and NMDC. REC is slated to enter the market on February 19 and NMDC on March 10. The Government’s efforts to curtail fiscal deficit will suffer badly if for some reasons, these FPOs too meet the same fate as the NTPC FPO. The Finance Minister could be having some sleepless nights these days and we don’t blame him.