With the Indian stock market near all-time peaks, the euphoria is also spreading to the primary markets and 2010 is likely to be remembered as the year in which India Inc raised record funds through IPOs and rights issues.
In the current year so far, Indian corporates have raised over Rs 50,000 crore through domestic issues. This is close to the record figure of Rs 52,900 crore raised by domestic firms through equity issues in the whole of 2007, a report by brokerage firm Motilal Oswal said.
"Given the pipeline of capital raising from both public and private sectors in the fourth quarter of CY'2010, we expect this year total capital rising to significantly surpass the previous high of 2007," the brokerage house said.
IPO subscription money is also an interesting indicator of the level of investor participation and the level of euphoria. For instance, in September alone, public offers were oversubscribed 11 times on average, with IPOs worth a total of Rs 3,400 crore attracting demand worth Rs 37,000 crore from investors.
Last month, Eros International Media's Rs 350 crore IPO was over-subscribed 27 times, while Tecpro Systems Rs 268 crore offer saw 24 times more demand. Similarly, Career Point Infosystems's Rs 115 crore IPO was oversubscribed 47 times, Va Tech Wabag's Rs 125 crore offer 36 times, Ashoka Buildcon's Rs 225 crore offer 16 times and Microsec Financial's Rs 147.5 crore offer 12 times.
Going forward, the issuance of fresh paper is likely to continue, given the nearly $10 billion disinvestment programme of the government and the private sector's requirement to raise equity to fund projects in sectors such as utilities, real estate and infrastructure.
State-run Coal India Ltd is coming out with its IPO later this month, through which the government expects to garner up to Rs 16,000 crore. Coal India's IPO is billed as the biggest ever public issue in the country till date. So far, Reliance Power's Rs 11,500 crore IPO was the biggest one.
"Indian markets are in euphoric times. This is evident in the strong performance of benchmark indices, above average valuations, unprecedented FII flows, large IPO subscriptions, increased traded volumes and so on," the report said.
India is one of the best performing markets globally and is poised to be one of the earliest to scale its previous peak and create new highs.
Last month, the NSE Nifty crossed the 6,000 points landmark, while the Sensex breached 20,000 points, levels last seen 32 months ago in January, 2008. In today's session, the Sensex was quoting at 20,475, about 730 points short of the record high of 21,206.77 achieved on January 10, 2008.
The key factor driving the rally in Indian markets has been inflows from FIIs (foreign institutional investors). So far in 2010, FII inflows stand at nearly $20 billion, the highest ever so far.
