Soaring Sensex spurs IPO fever

As many as 11 initial public offerings (IPOs) are either expected to open or close during the next five days, creating history of being the largest pack of public offerings (initial or follow on ones) open for subscription in the market in such a short span of time.

The flurry of activity is also expected to bring out the pulse of retail investors in the equity market, while the promoters are trying to make hay while the sun shines.

"Next week is likely to be the busiest calendar week in at least 16 years in the primary market, with about 11 issues expected to be open for subscription one day or the other," said Jagannadham Thunuguntla, equity head of SMC Capitals.

"Fiscal 1994- 95 was one of the busiest years with over 260 offerings hitting the market that was open for only 252 days ( during the fiscal). There could have had been such a busy week in that year," Thunuguntla added.

Three public offerings - of Career Point Infosystems Ltd, Microsec Financial Services Ltd and Eros International Media Ltd - that opened for subscription last week will close on Tuesday next. Four other offerings - of Ramky Infrastructure Ltd, Orient Green Power Company Ltd, Electrosteel Steels Ltd and VA Tech Wabag Ltd - are scheduled to open for subscription on Tuesday and Wednesday, according to the list of forthcoming offerings on the Bombay Stock Exchange (BSE) website.

Cantabil Retail, Gallant Ispat, Techpro and Ashoka Buildcon are the other offerings that are on the anvil before next Friday (September 24), merchant banking sources said.

About Rs 46,778 crore was raised through public offerings during 2009- 10, which was about 23 times the amount raised during the previous year, according to PRIME Database, India's premier database on primary market.

However, last fiscal was dominated by public sector issues.

"PSUs dominated the year with a total raisings of Rs 30,942 crore or 66 per cent of the total amount. This was the highest ever amount mobilised by the PSUs, the previous highest being Rs 16,563 crore in 2003- 04," said Prithvi Haldea of PRIME in his annual review.

About 43 new firms have been listed on the National Stock Exchange (NSE) in 2010, so far.

And two firms - Indosolar and Tirupati Inks - have completed their offerings last week. Thus, by next week- end at least 10 more firms will add to the list of public offerings during the year.

"This year could be the year of private sector public offerings, surpassing the PSU divestment target of  Rs 30,000 crore for the fiscal," said a merchant banker who wished not to be quoted.

Thunuguntla said, "Further activity in the primary market will depend on the performance of the secondary market in the next few months. Promoters are trying to make the best use of higher valuations prevailing in the markets." The bellwether BSE Sensex crossing the psychological barrier of 19,000- point mark recently has given wings to the dreams of promoters', who were seeking to find a better price for their stock than was seen over the last two years. BSE Sensex dipped below 8,000- point mark within six weeks after the Lehman Bothers' collapse on September 15, 2008.

Sensex, which was at 10,000 points in April 2009 crossed the 15,000- point mark in three months time and took 12 months to cross 18,000 points level. But on domestic growth expectations, supported amply by positive global cues, it crossed 19,000 points last week.