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Indian
equity markets are in a jubi-lant mood. With enthusiastic
inves-tors (whether domestic or foreign) happily pouring tons
of money, the benchmark indices keep conquering new peaks
on a continuing basis. The buoyant secondary market has its
rub off effect on primary capital market also. In fact, during
the last 12-15 months, the primary capital market in India
has seen a lot of activity. As compared to the secondary market,
the mood in the Indian primary market has been very vibrant.
As
can be observed from the given Table (Trend in IPOs), the
number of public issues increases when the secondary market
is booming and goes down when the market is bearish. During
2000-01, when equity markets were at their peak, there was
a rush on part of companies to raise funds. However, a sluggish
phase in subsequent years saw the race to raise funds dying
down. This trend, however, did not perpetuate as the markets
again started the northward journey from mid-2003. The period
saw companies rushing to the capital market for funds.
Justifying
the fact that every coin has two sides, the strong Bull Run
in the primary market has brought with it some unpleasant
effects as well. As Indian primary markets have been welcoming
all the issues with gusto, promoters and concerned intermediaries
involved have started pricing them very aggressively. Of late,
there has been a flood of issues in the primary market, which
puts a question on the very genuineness of the need to raise
funds through such issues. This indirectly suggests that many
of these issues are just capitalizing on the opportunity to
raise funds during boom times.
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