On November 4, 2010, Coal India Limited (CIL) made a spectacular debut on bourses, giving a listing gain of a decent 40%.
An outstanding show indeed, given the bouts of recent corrections in the
market in the second half of 2010 which have taken the zing out of many
an IPOs/FPOs this year. The phenomenal rise of the shares of CIL on the day
of listing, nevertheless, provides further impetus to the government's much
ambitious divestment program in recent years. Through CIL's mega IPO,
the largest ever so far, the central government raised Rs 15,000 cr.
So far, since 2009, the central government has gone for IPOs/FPOs
of close to a dozen PSUs, which include firms such as SJVN, NTPC,
NHPC, NMDC, REC, United India, Engineers India, CIL, SCI, MOIL, and Punjab
& Sind Bank, while FPOs of IOC, SAIL and ONGC are expected to hit the
market during the last quarter of fiscal 2010-11. Given,
the government plans to mop up Rs 40,000 cr during the
current fiscal 2010-11 seems to be on track.
One of the foremost objectives behind taking these unlisted firms public
is broad-basing the investor base, particularly retail investors, whose
participation remains very low even today. According to the Swarup Committee
report, India had only 8 million retail investors who participated in the
stock market in 2009. In contrast, in countries like South Korea and Taiwan,
domestic individual investors contribute up to 70% of the daily trading volumes.
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