That ICICI Bank’s Rs 8,750 crore issue got subscribed in the first few minutes and at last count had an oversubscription of over 10 times is a surprisingly good response for a follow on offer. That it followed a 3.5-fold oversubscription of India’s largest IPO, the Rs 9,625 crore issue by DLF, is even more surprising. Together, investor interest in the two companies is worth Rs 120,000 crore — that’s about the market capitalisation of TCS, India’s fifth most valued company. That the appetite is still not over and there is a large list of IPOs waiting to hit the market over the next few weeks and months take the surprise element to a higher orbit.
If you remember the run up to the DLF IPO, the market had lost a few points here and there. Pundits immediately came up with sound bites saying liquidity is getting over and investors are selling in the market to subscribe to DLF and that the market will fall further. It didn’t and once again delivered a lesson — in the short term, the market remains unpredictable, and for now there’s enough liquidity, thank you. But let’s leave the pundits and the analysts alone.
What I’m beginning to catch is a new attitude among institutional investors. For long they have lamented that the Indian stock market is not “deep” enough, that if institutions buy or sell stocks in any significant size, they hits circuits. That as a group, listed companies are unable to provide easy entry or exit (if a large transaction moves the price of a company up and down by 5-10 per cent, it is not easy to buy into or exit from a company).
With the DLF and ICICI Bank issues firmly in the pockets of institutional investors — retail investors and employee quotas are lagging behind — the underlying trend seems to be one of a deepening market. The market capitalisation of all NSE listed companies stands at Rs 3,898,078 crore — almost six times larger than what it was five years ago. Of course, the emerging market tag, the India growth story, the infrastructure push, the structural changes in the economy, and prosperity in general have all added to this deepening.
A 9 per cent economic growth brings with it a size and a scale that’s very different from a 4-5 per cent growth. And while economists are lowering growth forecasts to under 9 per cent because of the lag impact of rising interest rates, the general economic policy sentiment is aspiring for 10 per cent.
This 10 per cent growth needs huge investments, through debt and equity. Which in turn have to come from retail and institutional investors, who see potential in the India story and the companies that ride that story and write their own smaller ones. These small stories are no longer small. Approaching a delayed teenage they are growing fast, and hungry for capital, are willing to share that growth with investors. It is in this context that the deepening of India’s capital markets needs to be seen.
It’s raining SROs
The regulatory geography is changing and in just one week, two SROs (self regulatory organisations) announcements have hit us. On Wednesday, Securities and Exchange Board of India (Sebi) chairman M Damodaran asked Association of Mutual Funds in India (Amfi) to form an SRO for mutual funds, as in the new scheme of things, the industry body will get more autonomy. The next day, Amfi chairman A P Kurien responded, saying they’re going ahead with “a new model”. By then Damodaran, at an Indian Express event on financial planning, was inviting Financial Planning Standards Board India (FPSBI) to form an SRO for distributors, which FPSBI chairman Shailesh Haribhakti accepted with enthusiasm, saying Sebi should get a proposal in 45-days.
http://www.indianexpress.com/story/160226.html
If you remember the run up to the DLF IPO, the market had lost a few points here and there. Pundits immediately came up with sound bites saying liquidity is getting over and investors are selling in the market to subscribe to DLF and that the market will fall further. It didn’t and once again delivered a lesson — in the short term, the market remains unpredictable, and for now there’s enough liquidity, thank you. But let’s leave the pundits and the analysts alone.
What I’m beginning to catch is a new attitude among institutional investors. For long they have lamented that the Indian stock market is not “deep” enough, that if institutions buy or sell stocks in any significant size, they hits circuits. That as a group, listed companies are unable to provide easy entry or exit (if a large transaction moves the price of a company up and down by 5-10 per cent, it is not easy to buy into or exit from a company).
With the DLF and ICICI Bank issues firmly in the pockets of institutional investors — retail investors and employee quotas are lagging behind — the underlying trend seems to be one of a deepening market. The market capitalisation of all NSE listed companies stands at Rs 3,898,078 crore — almost six times larger than what it was five years ago. Of course, the emerging market tag, the India growth story, the infrastructure push, the structural changes in the economy, and prosperity in general have all added to this deepening.
A 9 per cent economic growth brings with it a size and a scale that’s very different from a 4-5 per cent growth. And while economists are lowering growth forecasts to under 9 per cent because of the lag impact of rising interest rates, the general economic policy sentiment is aspiring for 10 per cent.
This 10 per cent growth needs huge investments, through debt and equity. Which in turn have to come from retail and institutional investors, who see potential in the India story and the companies that ride that story and write their own smaller ones. These small stories are no longer small. Approaching a delayed teenage they are growing fast, and hungry for capital, are willing to share that growth with investors. It is in this context that the deepening of India’s capital markets needs to be seen.
It’s raining SROs
The regulatory geography is changing and in just one week, two SROs (self regulatory organisations) announcements have hit us. On Wednesday, Securities and Exchange Board of India (Sebi) chairman M Damodaran asked Association of Mutual Funds in India (Amfi) to form an SRO for mutual funds, as in the new scheme of things, the industry body will get more autonomy. The next day, Amfi chairman A P Kurien responded, saying they’re going ahead with “a new model”. By then Damodaran, at an Indian Express event on financial planning, was inviting Financial Planning Standards Board India (FPSBI) to form an SRO for distributors, which FPSBI chairman Shailesh Haribhakti accepted with enthusiasm, saying Sebi should get a proposal in 45-days.
http://www.indianexpress.com/story/160226.html