Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
IPO – Reason for the ‘downturn’ - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Jun 5, 2000

    IPO – Reason for the ‘downturn’

    The boom in the secondary market, especially in information technology stocks, has created a cascading effect on the primary market. We have seen a flurry of Initial Public Offerings (IPO) in the raising a whopping Rs 33,366 m, in the first three months of FY00 alone. But suddenly investors are now vary about IPOs. Why has this happened?

    Setting records
    Rs m Public Issues
    Jan-00 7,370
    Feb-00 20,023
    Mar-00 5,219
    Apr-00 755
    Total 33,366

    If one takes a brief look at the post-listed prices of the recent issues, many companies are trading much below their offer price. This has led to disillusionment among investors who thought that every issue, irrespective of its fundamentals, would turn out to be a gold mine. This has led many companies to postpone their issue plans.

    Much has been talked about the melt down of NASDAQ and battering of the software stocks being the main reason for the slackness in the primary market. But there is one more critical issue i.e. the quality of the IPOs that are storming the market. There have been issues from companies, which have yet to set up the infrastructure and are yet to commence their operations. Both the lead managers and the Securities Exchange Board of India (SEBI) seem to blame each other for this. The lead managers are blaming SEBI for allowing the companies to price issues at high premiums and the latter is blaming the lead managers for the improper due diligence on their part.

    But is the market heading for the same pit hole as the case was in 1994 when the finance companies were rocking the market? The solution lies with SEBI. Sometime back, SEBI waived the information technology companies from the compulsory three years profitability track record for Initial Public Offerings. On the other hand, the lead managers should also be more responsible. Unless SEBI takes some immediate steps to regulate the primary market, history will repeat itself.



    Equitymaster requests your view! Post a comment on "IPO – Reason for the ‘downturn’". Click here!


    More Views on News

    Sorry! There are no related views on news for this company/sector.

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    Proxy Plays: A Smart Way to Bet on 'Off Limits' Companies(The 5 Minute Wrapup)

    Aug 4, 2017

    The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 17, 2017 03:37 PM