With IPOs in doldrums, will SEBI ever understand investor disenchantment

Just one major IPO took place in 2013. Instead of working on reviving investor confidence and protecting them, SEBI plans to reduce disclosure—in a disclosure-based regime—to boost IPO interest.

I f Morgan Stanley’s exit reflects disenchantment with the mutual fund industry, then resource mobilisation through initial public offerings (IPOs) is in even worse shape. In the entire 2013 just one IPO caused a flutter among investors—of Just Dial. The other two worth a mention were VMart and Repco Home, while Power Grid picked up a massive Rs6,958 crore through a follow on offer. While, 35 IPOs from the small and medium enterprises (SME) mobilised around Rs367 crore, the IPO market is as much in the doldrums, as it was after the IPO mania of 1992-96 saw thousands of fly-by-night operators vanish with investors’ money. The difference between the situation 20 years ago and now is that policy-makers neither understand investor disenchantment nor do they care.

Consider the experiment with the SME sector. On the one hand, 35 public offerings based on a different set of rules (no filing of prospectus, but market-making mandatory and minimum application of Rs1 lakh) seem like good performance. But aggregator sites report that only 20 out of 45 stocks listed on the two national bourses are traded and that, too, with low volumes. But, instead of working on reviving investor confidence, the Securities and Exchange Board of India (SEBI) plans to relax entry barriers by scrapping IPO grading, reducing disclosures and doing away with even the formality of making a public offer. This is after the experiment with offering a safety net to investors had also failed (in fact, two issues offering a safety net had to pull out of the market). However, market observers believe this will only lead to SME listings being the newest way to launder money by hawala operators.

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COMMENTS

Vaibhav Dhoka

5 years ago

Investors securities is last priority here.SEBI is BOL-BACCHAN.

Nifty, Sensex battling the bears: Weekly Market Report

The downward pressure on Nifty is strong. Rallies are likely to be weak

This week the Sensex closed 342 points (or 1.61%) down at 20,851 while the Nifty closed at 6,211, down 103 points (or 1.63%).

 

Last week, we mentioned that Sensex and Nifty would head higher subject to dips. But the market has reversed course. The dip on Thursday was too sharp and the index may head much lower. On Monday, market sentiments were adversely hit after the RBI's latest Financial Stability Report (FSR) said that the risks to the Indian banking sector have increased since the publication of the previous FSR in June this year. RBI governor, Raghuram Rajan, warned in his foreword to the 8th edition of the FSR that any political instability after May 2014, post-results, will drag the beleaguered economy further down, and that a stable new government would be desirable. The market closed in the negative on Monday.

 

On Tuesday, the market closed with a gain. There were rumours about prime minister, Dr Manmohan Singh that he was likely to opt himself out of the prime minister's race for the 2014 elections. However, the PMO said that Manmohan Singh has no intention of stepping down ahead of the 2014 polls. The Confederation of Indian Industry (CII) said that the CII Business Confidence Index (CII-BCI) rose sharply to 54.9% in Q3 December 2013, from 45.7% in Q2 September 2013. The survey also strikes a note of caution as the downside risks to growth have still not abated and supply side bottlenecks continue to pose a problem.

 

On Wednesday, the market closed in the negative after the latest data on government's finances raised concerns that India may not be able to meet its target of containing fiscal deficit at 4.8% of GDP this year.

 

On Thursday, Markit Economics unveiled HSBC India manufacturing purchasing managers' index (PMI) for December 2013 which was down from 51.3 in November to 50.7. This signalled a second consecutive monthly improvement in business conditions. The PMI average for the final quarter of the year at 50.5 was greater than that seen for Q3 at 49.4. After the market opened high and rallied, a severe sell-off in the afternoon shattered the complacency of the bulls and the indices closed sharply in the negative.

 

On Friday, Manmohan Singh met the press to announce that he would not be a candidate for the Prime Minister’s position after the current term. He listed the achievements of the UPA government in the last 10 years and but admitted its poor success rate in generating employment in the manufacturing sector and failure in controlling persistent inflation. The market fell initially on Friday but recovered towards the close.

 

Among the other indices on the NSE, the top two gainers were IT (1%) and Smallcap (0%) while the top two losers were Infrastructure (4%) and PSE (3%).

 

Among the Nifty 50 stocks, the top five gainers were Ranbaxy Laboratories (3%); Lupin (3%); TCS (3%); Maruti Suzuki (1%) and H C L Technologies (1%) while the top five losers were Mahindra & Mahindra (7%); Bharat Petroleum Corp (6%); Tata Power Co (6%); Larsen & Toubro (6%) and Oil & Natural Gas Corp (6%).

 

Of the 1,265 companies on the NSE, 647 closed in green, 588 closed in red while 30 closed flat.

 

Out of the 27 main sectors tracked by Moneylife, top five and the bottom five sectors for this week were:

 

Top ML sector

 

Worst ML sector

 

Lifestyle & Leisure

2%

Con_Epc_Infra

-5%

Textiles

2%

Oil & Gas

-4%

Software & It Serv

1%

Energy

-3%

Inds Intermediates

0%

Hotels

-3%

Chemicals

0%

Refineries

-2%

 

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Downward bias continues with Sensex, Nifty: Friday closing report

Nifty should close above 6,250 for the first sign that the downtrend has been arrested

On Thursday we mentioned that the market headed for a bigger fall unless the Nifty manages to break through the level of 6,270. On Friday the index traded well below this level. We expect the indices to continue to move down. If Nifty closes above 6,250, it would the first sign that the downtrend has been arrested.

 

Although the market closed Friday flat with a slight negative bias, the indices opened with a gap down. The Sensex opened down 69 points at 20,820 while the Nifty opened 27 points down at 6,195. The Sensex moved in the range of 20,731 to 20,885 while the Nifty moved in the range of 6,171 to 6,222. The benchmarks closed almost near the day’s high. Sensex closed at 20,851 (down 37 points or 0.18%) while the Nifty closed 6,211 (down 10 points or 0.16%). The NSE recorded a lower volume of 64.25 crore shares.

 

Among the other indices on the NSE, the top five gainers were IT (2.06%); Smallcap (1%); Realty (0.98%); Media (0.61%) and Service (0.60%). The top five losers were Energy (1.54%); PSE (1.51%); Infra (1.40%); Commodities (1.25%) and Metal (1.19%).

 

Of the 50 stocks on the Nifty, 22 ended in the green. The top five gainers were Ranbaxy (4.02%); Lupin (3.20%); TCS (2.63%); Infosys (2.32%) and Maruti (2.18%). The bottom five losers were Tata Power (3.95%); M&M (3.73%); BPCL (2.71%); Tata Motors (2.51%) and Bhel (2.30%).

 

Of the 1,230 companies on the NSE, 624 closed in the green, 554 closed in the red while 52 closed flat.

 

Today the market awaited the prime minister Manmohan Singh scheduled meet to address several issues including list the achievements of the UPA government in the last 10 years. Apart from the mention of the Government continuing effort to implement policies to revive growth, eliminate poverty and ensure the safety and security of all people, the prime minister also admitted its poor success rate in generating employment in the manufacturing sector and concern over its failure in controlling persistent inflation. He also said he would "hand the baton over to a new prime minister," after general elections this year, ruling out a third term.

 

US indices closed in the negative on Thursday. Manufacturing activity in the US expanded in line with expectations in December, holding near the fastest rate since April 2011, industry data showed on Thursday. US ISM manufacturing PMI inched down to 57.0 in December from 57.3 in November. The new orders index increased in December by 0.6 points to 64.2, the highest since April 2010. The employment index registered 56.9, an increase of 0.4 points compared to November's reading of 56.5. December's employment reading is the highest since June 2011 when the employment index registered 59.0.

 

Except for NZSE 50  (up 0.68%) all the other trading Asian indices closed in the negative. Hang Seng was the top loser, down 2.24%. European indices were trading in the green while the US Futures were trading marginally in the green. Euro zone manufacturing grew at the fastest rate since mid- 2011 in December on brisk business in Germany and Italy, Markit purchasing managers' indexes (PMIs) showed. In Germany manufacturing grew at its fastest pace since mid-2011, with its PMI rising to 54.3 from 52.7.

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