The domestic equity markets, which is under a severe shock since the last two days, is likely to hit the Initial Public Offerings (IPOs) by the companies as well as New Fund Offerings (NFOs) by the mutual funds (MFs) in the capital market, the market players said. The Bombay Stock Exchange (BSE), Sensex, has dipped by 12% or 2,284 points in the last two days to end at 16,729 points on Tuesday. Commenting on the impact of the market meltdown on the primary market, Prithvi Haldea, managing director, Prime Datebase told FE that the market meltdown will have a huge impact on the forthcoming IPOs. The IPOs, which will list during the period will close at a lower price.
Investors should expect a cut in the premium of those IPOs, whose bidding have been closed and are in line for listing. Companies, which have announced their IPO, may have to revise their price band or have to defer the opening of their offer. Companies that have received the Sebi nod may defer their IPO plan for some time, he said.
The bidding process of the two mega IPOs–Reliance Power Ltd (RPL) and Future Capital–has been completed last week. And, they are expected to list in the next month. While, the bidding of Cords Cable Industries Ltd and J Kumar Infrastructure Ltd is going on. IRB Infrastructure, Wockhart Hospital and Onmobile have announced their plans to hit the market soon. There are several companies, which have either received Sebi nod or their red-herring prospectus is under Sebi’s consideration.
Sanjay Prakash, CEO, HSBC AMC also agrees that the present situation may deter the investors at the grass-root level from investing in the equity-linked NFOs. However, well-informed investors may take the current situation in his stride as the current market level offers an attractive buying opportunity for them. Hence, the fund house will not face any problem in the resource mobilisation, he added.
HSBC Investments have also announced the opening of the Emerging Markets Fund, which will close on February 15. There are several other NFOs in the market, which open for subscription. AIG Infrastructure & Economic Reform Fund, HDFC Infrastructure Fund and Lotus India Mid N Small Fund are available for the investors to invest. The response to these NFOs by the investors will be an indication that how long the current situation will survive, said market watchers.