It’s been raining and raining quite heavily almost all over the country. It seems the rain gods have been very kind to our country this year. The stock market is seeing a different kind of rain and it is likely to cause problems of as different kind. The large number of IPO’s which are coming in the second fortnight of September are creating a problem where the investor is unable to put money in all the issues. This bunching of issues is for two broad reasons where the first is on account of results which are stated in the RHP or Red Herring Prospectus. SEBI mandated that the RHP must have audited accounts which are not more than six months old on the day of issue opening. This effectively means that any issue opening up to the end of September must have in its document audited accounts for March 2010 or later.
Coal India Limited which would be the largest issue ever to hit the capital markets is slated to open on the 18th of October and is likely to be of a size of approximately 13000 to 14000 crs. There is an expectation amongst market players that until this issue is over there would be buoyancy in the markets and IPO’s would continue to come.
There are roughly 16-18 IPO’s which are likely to open starting from Indosolar and ending in the week of 4th October 2010. We have seen two completed IPO’s in the last week and three issues which are currently on. Road shows for three other issues were held last week and would be opening in the week beginning 20th September. There are four road shows scheduled for Monday and roughly another 5-6 issues which would have road shows in the coming week.
The BSESENSEX is ruling at the 19500 range and markets are on a roll and have been that way for quite some time. Tips and trading calls are dime a dozen in the market and almost all investors, traders and market players have their hands full and are virtually fully invested currently. There appears to be a shortage of liquidity for applying in so many issues. We are all aware that there is a large population of investors who use the IPO route for first day first hour exit and are only interested in a quick exit. Even such investors would not be able to rotate their money as the refund would not be available for application in following issues of this bunched up group of IPO’s.
What should an investor do? Very clearly this is the first time in many many years when an investor is spoilt for choice. He must take full advantage of this and pick and choose the issues in which he wants to apply. The issues opening are known and it would be advisable to look at them and decide where the scare resource should be deployed. I believe we could also have some casualties this time where a couple of issues are unable to collect the required amount or have to extend the issue for subscription.
The number of issues has also put people like us under pressure and time available for analysis has reduced considerably. This bunching will also affect the listing of shares and their performance on listing would decide the future course of the primary market.
Some of the issues opening next week include Ramky Infra, Orient Green Power and Cantabil. These companies have completed their road shows. Those companies which are having their road shows next week include Electrosteel, Techpro, Vatech, Gallant, Ashoka Buildcon, Vedmutha Industries and many more.
Invest but invest wisely.
