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.  

Syncom Healthcare Limited is to list on Monday the 15th of February. The IPO was open for subscription in a price band of Rs 65-75 during 27th and 29th of January. The issue received excellent response from Non-institutional investors and good response from retail investors. Overall the issue was subscribed just over 5 times.

The issue has been priced at Rs 75 per share.

ARSS Infrastructure Projects Limited which had opened its IPO on Monday the 8th of February and closed today, the 11th of December 2009 received unprecedented support. The issue was well supported in all categories and received excellent response. This issue has beaten all records for oversubscription since the IPO season began sometime in July /August 2009. The previous best was from Infinite Computer Solutions Limited which was subscribed 43.22 times.

What is really heartening to note is that ARSS has been subscribed by a higher ratio in each of the three categories in which shares were offered.

The issue price band was Rs 410-450. The company has raised against its issue size of Rs 103 crs, bids for Rs 4900 crs. This clearly means that if issues are reasonably priced and offer value to investors, there is no shortage of liquidity. Pricing is the key issue and promoters and merchant bankers must realise this.

The cost of leveraged investors in the HNI category which saw an over-subscription of 124 times means that each share would have an interest component of Rs 214. This means that the share must trade higher than Rs 675 for the HNI to break even. This is a tall order by all means.

Let us see what the listing is like.

Related posts:

• IPO Deluge: Money or liquidity is a concern
• Vascon Engineers Listing: Day one Delivery
• Vascon Engineers Listing Morning: Share opens positive but unable to sustain

Hathway Cable and Datacom Limited is tapping the capital markets with an issue which opens on the 9th of February 2010 and closes on Thursday the 11th of February 2010 in a price band of Rs 240-Rs 265. The company also proposes to offer 30% of the QIB portion to Anchor Investors.

Business
Hathway is the leading cable television services provider in India as well as the leading cable broadband services provider. Hathway offers analog and digital cable television services across 125 cities and towns and high speed cable broad-band services across 18 cities. As of 30th November 2009, Hathway had 13.47 lakh subscribers for analog cable television, 10.02 lakh subscribers for digital cable. The company also has 3.22 lac broadband subscribers. Hathway also has a pan-India ISP license and has 9.64 lakh two way broadband enabled homes.

Hathway currently offers up to 176 channels through its digital platform against 85 channels on our analog platform. The digital platform can offer DVD quality picture and stereophonic sound and also gaming. The company plans to introduce pay-per-view, including Hindi movies and educational programs. The under reporting of subscribers by the local cable operator or “LCO’s” is a rampant practice and this is substantially controlled by the use of digital set-top boxes which gives accurate data about number of subscribers using the service.  Hathway employs 642 full time employees as well as 22 consultants. The company has outsourced 2182 jobs for numerous functions such as customer service, support, sales, collection and other back office administration functions.

TRAI has mandated in compulsory CAS areas that 58 free to air channels are offered at a flat Rs 77 per month to subscribers. Hathway also offers a bouquet of channels which come at a price ranging from Rs 59 to Rs 129 per month and also a selection of specific channels that a customer may require. Based on the requirement of the customer he/she chooses his selection of channels and the relevant subscription for the same.

Objects of the Issue

Acquisitions of Customers	Rs 243.60 crs
Investment in the development of our digital cable and set top boxes	Rs 156.40 crs
Investment in the development of our broadband infrastructure	Rs 83.0 crs
Repayment of Loans	Rs 96.7 crs
General corporate Purposes	X
Issue Expenses	X

The company would be raising Rs 530 crs at the top end of the price band and with the additional term loan of Rs 50 crs would make a total of Rs 580 crs available to the company to meet the objects of the issue. The issue related expenses are to be borne out of this sum of Rs 580 crs (530 crs top end plus 50 crs term loans) and the objects excluding issue expenses itself amount to Rs 579.7 crs. Very clearly the company would not be able to meet the objects of the issue at the top end of the price band also and would have to ‘manage’ the same. Secondly there would be major deviations in the use of proceeds as the net amount raised would fall short of the money required. This would lead to the company having to borrow further or reduce the investment plans – in short affecting the growth plans and performance of the company. 

Financials
Hathway has been recording significant growth in revenues since the year 2006-2007. Revenues from operation have increased from Rs 301.38 crs in the year ended March 2007 to Rs 414.56 crs in March 2008, to Rs 663.39 crs in March 2009 and finally in the six months ended September 2009 to Rs 362.31 crs. The growth in percentage terms has been 37% in 2008 over 2007, 60% in 2009 over 2008 and 9% in 2010 over 2009 assuming the half year numbers are annualised.

The company has a very healthy EBITDA with the same rising from Rs 22.18 crs in 2007 to Rs 21.30 crs in 2008, to Rs 103.73 crs in 2009 and Rs 71.86 crs in the six months ended September 2009. The company has a large amount of debt and incurs huge depreciation as it is in the investment mode. The company has provided interest of Rs 14.59 crs, Rs 22.10 crs, Rs 43.05 crs and Rs 27.93 crs respectively. It has also provided for depreciation, amortisation and impairment of Rs 39.26 crs, Rs 58.88 crs, Rs 96.10 crs and Rs 61.73 crs respectively leaving a net loss of Rs 62.45 crs, Rs 66.81 crs, Rs 62.74 crs and Rs 42.42 crs in the half year ended September 2009 respectively.

The company expects to add large number of subscribers and also increase the ARPU’s (average revenue per user) significantly as its growth strategy. It also intends to increase the service offerings and do cross-selling of services so that it breaks even and starts generating profits.

To this effect the average revenue per unit for a MSO has increased from Rs 42.66 per month in 2007 to Rs 55.83 per month in March 2009 and Rs 57.05 per month in the half year ended September 2009. In the broadband internet business the ARPU’s have actually decreased from Rs 462.61 per month in 2007 to Rs 307.39 per month in March 2009 and improved slightly to Rs 322.79 in the half year ended September 2009.  

Valuations and Comparisons
There are very few comparable players with whom the company can be compared. For comparison sake some of the names offered include Sun TV, Zee Entertainment, NDTV, IBN18, Dish TV, Wire and Wireless and the recently listed Den Networks. Den Networks was a highly hyped issue and even three months after its listing the share is unable to trade above its issue price. Sun TV Network is the most successful of the peers and enjoys excellent ratings in the area of choice that it operates in. It is basically a Southern India player and has more than 40% net profit in its operations. In terms of revenue it achieved sales of just over Rs 1000 crs in the year ended March 2009 and has done Rs 1028 crs in the nine months ended December 2009. Its net profits for the year ended March 2009 were Rs 437 crs while they are Rs 402 crs for the nine months ended December 2009. Sun TV is trading at a PE multiple of 28.3 based on the 9 months annualised numbers of the period ended December 2009. The others are entertainment channels with the exception of Dish TV and Wire and Wireless.

Hathway has yet to make profits and it may be some time before the same happens. The company is in an investment mode and needs to continue to subsidise the set-top box to increase its number of subscribers and start generating the monthly rent from them. This subsidy is a drag on the company and the breakeven is almost three years. Secondly the increase in numbers becomes mandatory for the business to survive.

Valuing a company on the basis of price earnings for a loss making company becomes infructuous or meaningless. The other way one could compare it is on the basis of EV/Ebitda and this is a high 29.16 times based on the current half year ended September 2009 of Rs 72 crs on an annualised basis and considering market cap at the top end of the price band of Rs 265 of Rs 3800 crs. There is a current debt on the books of the company of about 400 crs. This 29.16 is extremely high. If one were to assume growth and expect the company to earn an EBITDA of Rs 200 crs next year the EV/EBITDA would still be an extremely high 21 times.

Conclusion
The issue is expensive and there is no immediate driver which could make the issue attractive on improved valuations in the near term. With huge amount of paper coming to the primary market, it makes sense to be choosy and preserve cash for the time being. I believe one should just avoid this issue as there is nothing available for investors and allow the institutional players to pick up the share.

SEBI disclaimer: – I do not intend to subscribe to the issue.

ARSS Infrastructure Projects Limited is tapping the capital markets to raise Rs 103 crs in a price band of Rs 410-450 from Monday the 8th of February 2010. The issue closes on Thursday 11th February 2010.

Business

ARSS is in the business of construction activities. The company undertakes construction of railway infrastructure, roads, highways, bridges and irrigation projects. The company started off from Orissa and it has eight stone crusher units in the state. Currently the company is operating and executing projects in 14 states in India. The company has developed expertise in railway projects such as earthwork, major and minor bridges, supply of ballast, sleepers, laying of sleepers and rails, linking of tracks etc. ARSS also does construction of roads, highways, bridges, irrigation projects and also EPC for railways.

The present order book is of Rs 2877 crs and 40% of the same is from rail projects while another 40% is from road projects. The order book size of the company is about 4.58 times its sales for the year ended March 2009 and just about 3.5 times its 9 months sales for the period ended December 2009 on an annualised basis. The company typically doubles its turnover in the fourth quarter compared to the previous three quarters. Discounting the same by about 20% we could see a turnover of about 1000 crs for the current year, which would imply an order book of just less than 3 years, or 2.8 times. This shows the robust execution skill of the company. The company bids for projects on a standalone basis as well as through project specific joint ventures with players like RITES, Kalindee Rail Nirman, and Patel Engineering amongst others.

ARSS has completed 86 projects, 300kms of roads, and over 200kms of rail lines till date.  Some key projects under execution include the construction, rehabilitation and widening of Cuttack-Paradeep road in Orissa at a cost of Rs 208 crs, work order for rail infrastructure work of Jindal Steel and Power at Angul which project value of Rs 261 crs does not include the rails which would be supplied by Jindal Steel and construction of new broad-gauge line, bridges and complete infrastructure between Salem-Karur in Tamil Nadu. ARSS has expertise in the railway infrastructure business and this is a key focus area for the company.

Objects of the Issue

Financials

The company has reported revenues of Rs 315.43 crs for the year ended March 2008 and Rs 628.22 crs for the year ended March 2009. The same have almost been achieved in the nine month period ending December 2009 at Rs 610 crs. The profit after tax for the same period is Rs 26.8 crs for March 2008, Rs 51.04 crs for March 2009 and Rs 50.08 for the nine month period ended December 2009.

The revenues have almost doubled from 2009 march numbers over 2008 March numbers. The nine months ended December 2009 show that revenues in nine months are equal to revenues in 12 months of the previous year indicating a 33% growth having been already achieved. The revenues in the fourth quarter are significantly higher than the remaining quarters of the year and to expect that the fourth quarter would see sales of Rs 400 crs or higher would certainly be in place. This would imply a growth of 61% in sales of March 2010 over March 2009. Profit after tax grew by 90% in March 2009 over March 2008, and in nine months ending December 2009 is equal to numbers for 12 months ending March 2009. The net margins are a healthy 8.49% in March 2008, 8.12% in March 2009 and 8.21% in December 2009.

The company’s financials are decent and it has been achieving good margins and excellent growth.

Valuation

Excellent growth rates, decent margins, substantial order book and huge potential all make this business attractive and an excellent investment objective. The EPS for the company on March 2008 profit after tax is Rs 21.34 per share which has almost doubled to Rs 40.66 for the period ended March 2009. Based on nine months numbers for December 2009 the earnings per share is Rs 39.89.

If one were to look at these numbers on an annualised basis the same would be Rs 53.18. If however we were to look at the basis of revenue of Rs 1010 based on the fourth quarter sales and assuming a constant net profit margin of 8.21% the profit would be Rs 82 crs and EPS would be Rs 66.

Recalculating the EPS on a fully discounted basis the share capital of the company would increase from Rs 12.554 crs to 15.066 crs at the lower end of the price band of Rs 410 and to Rs 14.84 crs at the upper end of the price band of Rs 450. The fully diluted EPS at the lower price band for the year ended March 2009 would be Rs 33.88 and at the upper price band Rs 34.39. Similar numbers for nine months ended December 2009 would be Rs 33.24 and Rs 34.39 respectively. If one were to take the estimated profit for March 2010 of Rs 82 crs the EPS would be Rs 54.42 and Rs 55.25 respectively.

Based on these projected numbers the issue price band of Rs 410-450 is offering shares at a price earnings multiple of 7.53 at the lower price band and 8.14 times at the upper price band. These valuations look attractive considering the growth opportunities in the sector. 

SBI has invested in the company’s equity in January 2008 at a price of Rs 315 per share. They hold 10 lakh shares.

Comparison

There are a large number of players in the construction or infrastructure segment considering its size and geographical reach or spread. There are many segments within the same and there are various players who concentrate in their niche segments. ARSS concentrates in the rail and road segments. In the rail segment there are very few players such as Larsen and Toubro and Kalindee Rail. In the road segment there are many players such as Tantia Constructions, Pratibha Industries, Patel Engineering, IVRCL and Nagarjuna Construction amongst others. The last two players are fairly large in scale and operations.

Risks

The company is in the business of construction and is present in 14 states and currently working on about 150 sites. There are a number of cases and legal proceedings pending against the company. There is also a criminal case against one of the promoters of the company. The fragmented nature of the industry and the fact that there is intense competition in the market may affect margins in the near term and thereby affect profitability.

Conclusion

There is tremendous supply of paper in the form of IPO’s these days. The current market sentiment is also down and markets have lost over 10% in the benchmark indices over the last few weeks. Historically retail investors do not apply in issues where the price is above Rs 250-300 simply because the allotment of shares to them is small. This issue being in the price band of Rs 410-450 is likely to see a slightly muted response from retail investors on account of the high price and secondly the current bad sentiment.

As far as the issue is concerned, the company has done well in recent times. ARSS has a healthy order book in excess of Rs 2870 crs, decent net margins of over 8% and a niche segment where it does business for the railway infrastructure. Located with its base in Orissa where it has 8 stone crushers, it is able to procure its materials for construction at cheaper prices.  

All in all a decent issue which is attractive and investors looking to make money must subscribe.  One should expect a return of about 20-30% by the time the March 2010 results of the company are available if not earlier.

SEBI Disclaimer: – I intend to subscribe to the above issue.

Aqua Logistics Limited which had initially kept a price band of Rs 220-230 and then extended the issue and reduced the price to Rs 200-225 has priced the issue at Rs 220. Retail investors will be offered a discount of Rs 5 on this issue price and will therefore get shares at Rs 215.

Hathway Cable & Datacom Limited has fixed the price band for its IPO between Rs 240 and Rs 265. The issue opens on Tuesday the 9th of February and closes on Thursday the 11th of February 2010. The issue consists of a fresh issue of 2 cr shares and an offer for sale of 77.50 lakh shares. The total issue would be for 2.775 cr shares. The issue would raise Rs 666 crs at the lower price band and Rs 735.38 crs at the upper price band.

The market capitalisation post issue at the lower price band would be Rs 3428.57 crs while at the upper price band it would be Rs 3785.71 crs.

There were a total of 21 IPO’s in 2009 of which 17 have been listed and three would be listed in the first three days of 2010. These issues are JSW Energy, Godrej Properties and DB Corp. The fourth issue was MBL which had to give an option to investors to withdraw for non adequate disclosures in the RHP.

Coming to the year 2009 of the 17 issues which listed, 8 of the issues closed in positive territory while 9 closed in negative territory.

Of the nine losers, four were in the category of less than 10%, one was in the category of more than 20% but less than 25%, three in the category of more than 30% but less than 50%, while one was more than 50%.

Of the eight gainers, two were marginal gainers with less than three % gain, one in the category of more than 15% but less than 25%, two in the category of more than 25% but less than 50%, one in the category of more than 50% but less than 60%, one with a gain of almost 160% and the top performer with a gain of 312%.

The top performer was a small education company from Chennai called Edserve Softsystems Limited. The issue price was Rs 60 and had a dramatic listing with the stock touching a high of Rs 147 on listing day and having a dramatic fall thereafter on the second day itself. In less than a week or ten days of trading fell to Rs 30 and made a low of 18.70 before rising as dramatically to higher than Rs 250 a gain of four times than the issue price.

The second best performer was another IT company which had come out with an offer for sale and fresh issue. The issue was undersubscribed and had to be extended for being subscribed. The issue has been on an uptrend ever since listing day and is up 160%. Other notable gainers included Mahindra Holidays which gained 53% and the last issue to list in 2009, Cox and Kings which has gained 37%.

Coming to the losers, the top loser was Euro Multivision which is an existing CD and DVD disc manufacturer which is now venturing into the business of manufacturing photo voltaic cells. The stock was issued at Rs 75 and made a low of Rs 27.30. The stock has lost 54% and closed trading for the year at Rs 34.45. The other significant losers were Rishabdev Technocables, Raj Oil Mills and Excel Infoways.

All the power generating companies which went public and listed last year are trading in the red with Indiabulls Power being the biggest loser at a discount of almost 23% and Adani Power now at a discount of just about 1%.

The table above shows that issues which are reasonably priced have given decent returns to investors but those where the pricing is aggressive or overpriced, issues are trading at not only a discount but also did not fare well at the time of IPO issue.

A case in point is the stupendous response received by the PSU issue of NHPC which was very heavily subscribed by all categories of investors. The issue was overpriced and as a result of the same even four months later is still trading at a discount of 5.42%.

With a spate of IPO’s from the government and the private sector expected in 2010, let us hope and pray that good sense prevails on the Promoters and Merchant Bankers and the pricing of IPO’s becomes reasonable if nothing else.

Wishing all a prosperous new year 2010.

During the last ten days we had a unique situation in the Indian IPO markets. We had three back to back high profile IPO’s one after the other. All these issues were in a hurry to complete their offerings before overseas investors left on their annual Christmas and New Year holidays.

First of the block was a power generating company, JSW Energy Limited which opened on Monday the 7th of December and closed on Wednesday the 9th of December. The issue was for Rs 2700 crs and was in a price band of Rs 100 to Rs 115 with a discount of Rs 5 per share for retail investors.

The second issue was Godrej Properties Limited, a real estate developer with a unique model where he does not invest in buying land banks but enters into joint development of real estate with a land owner. The issue opened on Wednesday the 9th of December and closed on Friday the 11th of December. The price band was Rs 490 to Rs 530 and the issue was to raise between Rs 462 crs and Rs 500 crs.

The third issue was from DB Corp Limited a publishing or media company, the publishers of Dainik Bhaskar. The issue opened on Friday the 11th of December and closed on Tuesday the 15th of December 2009. The price band was Rs 185 to Rs 212, and the issue was to raise between Rs 336 crs and Rs 383 crs.

The issues which were high profile in nature and were expected to impact the primary markets significantly going forward.

The three issues fared differently and impacted the markets in a different manner.

JSW Energy Limited.
This was the fourth issue from a power generating company after Adani Power, NHPC and Indiabulls Power. The response to the earlier issues in the case of Adani Power and NHPC was extremely positive. It may be mentioned that QIB subscription in Adani Power and NHPC was good and very well received. HNI response to NHPC was unprecedented in recent times and was over-subscribed close to 57 times. Retail subscription was also good and considering the size of issues was more than adequately oversubscribed. In the case of Indiabulls Power, it received even better response than Adani Power and NHPC in the QIB category, but was not well received in the remaining categories.

The common link between all the three issues was the post listing syndrome where the stocks tanked and are trading at a substantial discount to their issue prices. In this background market participants expected JSW Energy to be reasonably priced considering the adverse sentiment that Power generating companies had. However when the price band was announced, the pricing was as aggressive as any other power issue, and this made investors once again wary of the power generating new issues. The response was most uninspiring from all quarters and if some sort of a bailout by LIC and ICICI was not done it would have turned out be a real disaster. The company and its promoters are well established people. The company had a 1000 MW in operation and the remaining 2150 MW approximately would be in operation in the next 18 to 24 months. Here was a profit making company in a great business, and everything in place for it to b a great issue. There was one missing element the over aggressive price and a great issue became an also ran issue. The issue was just about subscribed and had to be priced at the bottom end of the price range of Rs 100 to Rs 115. The issue price fixed was Rs 100 for all and Rs 95 for retail. Irrespective of what happens on listing to this share, other power generating companies coming to the markets in 2010 will face negative investor sentiment to this sector.

The second issue was from Godrej Properties Limited. The issue was from a real estate developer with a unique business model. The issue was well received and was oversubscribed in the institutional category by about 7.45 times. It remained under subscribed in the retail and HNI category and was finally subscribed 4 times. The issue was priced at the lower end of the price band at Rs 490. End of the day, people found the issue expensive and hardly anything on the table for investors.

The third issue was from DB Corp Limited, a publishing company with three newspapers under its belt. They are Dainik Bhaskar, Divya Bhaskar and Business Bhaskar. They have a presence in 11 states and have 48 editions. A great deal of negative publicity in competing newspapers pushed DB Corp to the top of mind recall of investors. What happened on the last day of subscription is probably recent history. The share issue received unprecedented response across segments.  The issue was subscribed a record 68.5 times by QIB’s, 26 times by HNI’s and 3.4 times by retail. The overall subscription was 39.5 times making this probably the best received IPO in 2009.

The idea of repeating the facts and trying to analyse what happened in these three back to back issues in a total working duration of a mere seven days is to understand what happened and learn for the future. It appears the IPO pipeline is huge and we will have a large number of issues in the next few months. The government of India is also planning a few issues and they should be happening in the next few months with NTPC probably happening as early as January 2010.

Pricing is a key factor and this has been proved without any doubts in these three issues. While the over expensive and aggressive pricing saw JSW Energy just scrape through, we saw Godrej Properties receive adequate response from QIB’s at the lower price band. DB Corp, interest just exploded simply because the first two issues had no support and then the third also got the effect of pent up demand.

Secondly it is of paramount importance to explain the business and the justification of pricing. Merely stating that it is based on feedback of overseas investors does not help because there are enough instances like in the case of Indiabulls Power, NHPC and Adani Power where even after huge support and subscription from QIB’s, the shares have simply tanked post listing. One wonders when there is so much of demand during the subscription period, when post listing the share is available 25% cheaper, why there is no follow up buying from those investors who have not been allotted in full.

Thirdly the Indian Investor is becoming more intelligent. Gone are the days when the presence of one merchant banker in the team of an issuing company automatically ensured full support and subscription. Today the retail investor is more aware and there are enough examples to prove in recent issues where even though the issue is over -priced retail stays away. In other cases if the company business is not understood or seems unclear, investors have simply stayed away. I believe with 30% to 35% of issue size to be allotted to this category in every issue, he deserves more attention than what is being given.

Finally sentiment is a key to stock market success. We all know what positive sentiments and negative sentiments can do to this market. The BSESENSEX was at 21000 in January 2008, at 8000 in October 2008, 12000 in March 2009 and 17000 currently. Ground reality and economic conditions have certainly not moved or changed to reflect this huge volatility. What has changed is sentiment. When the markets were booming people’s views on the economy were over exaggerated and they were overtly bullish on the economy and similarly at 8000 they were over pessimistic. This led to change in perception and hence the huge volatility.

2009 is drawing to a close and we are less than two weeks away from the start of 2010. Let us all hope that the community will learn to respect the retail investor, look at sentiment and above all remember that IPO is an invitation to share progress and participate in wealth creation for all stakeholders not just the investor.