The primary market has hit an all-time low in terms of mobilisation. During the first four months of 2001-02, only one issue has hit the market, though as on March 31, 2001, 80 companies had received the Securities & Exchange Board of India's approval.
According to Prithvi Haldea of Prime -- the country's leading database on the primary capital market -- IMAP Technologies Ltd is the only issue to have hit the market during April-July. "This has been an all time low in the last 25 years," Haldea said.
Moreover, the size of IMAP's float was Rs 1.8 crore. In other words, mobilisation from the market during the period has been less than half-a-million dollars. This, according to Haldea, is also a new low. "This is a clear reflection of the poor primary market conditions and the lack of liquidity in the capital markets," he said.
Last year, according to Prime, mobilisation through public issues stood at Rs 2,479 crore. While this represented a decline of nearly 17 per cent from Rs 2,975 crore raised in 1999-2000, it was still significantly higher than Rs 504 crore raised in 1998-1999, the worst year for the new issue market. Of course, the mobilisation was nowhere near the Rs 13,312 crore raised in 1994-1995. It may, however, be pointed out that 1999-2000 had seen the primary market finally emerging out of its slumber and but for the Nasdaq crash in April 2000, the mobilisation in 2000-2001 would have seen an upward climb.
As per current indications, this year could be worse. The mobilisation targeted by 79 public issues waiting on the wings is Rs 2,423 crore. A company can raise a public issue within one year of getting Sebi approval, but according to Haldea, getting a Sebi nod is the final step by the company before going in for a public issue and normally, companies list their issues within 15-20 days of getting the go-ahead.
"Only one, of the 80 companies, has come forward to list its issue because of the unfavourable market conditions. The fact that the companies are waiting even four months after getting Sebi's clearance obviously depicts the lack of confidence in the existing market conditions. They are waiting for it to improve," Haldea said.
