Q1 FY06 to ring in issues worth Rs 20,000 crore

Kolkata, March 28 | Updated: Mar 29 2005, 05:38am hrs
Equity investors will be spoilt for choice in the new financial year. According to market estimates, a spate of new and rights issues adding up to Rs 20,000 crore is scheduled during the first quarter.

During the period April 2004 to January this year, 21 issues adding up to Rs 16,047 crore hit the market.

Market watchers said that, with the both the benchmark indices the 30-share Sensex and 50-share S&P CNX Nifty moving up, more corporates are likely to cash in on this opportunity. The prime movers will be corporate houses like ONGC, Power Finance Corp, Oil India, Provogue India, IL&FS Investment, 3i Infotech, among others.

According to S Mukherji, MD & CEO of ICICI Securities, with most companies in an expanding mode, equity funds will be the flavour of the day, especially during the first quarter. The market can easily see fresh issues around Rs 20,000 crore, with the PSUs and banks expecting to hit the market, he said.

Banks like Bank of Baroda, Bank of India, Indian Bank, Oriental Bank of Commerce are all expected to hit the market to shore up their Tier I capital. Apart from riding the stock market boom, the Basel II consideration is driving banks to raise their capital level. Under Basel II norms, which comes into force beginning 2006, additional capital will be needed to take care of market and operational risks.

Small and medium corporates are also lining up their plans to cash in on this equity boom. Prominent ones are SKS Shipping, Mangalam Organic, Gokuldas Exports and Beeyu Overseas.

A lot will depend on the fourth quarter performance, which is expected to be good, said Mr Mukherjee.

The IPO boom will stretch up to end-October, said Care Ratings executive director DR Dogra.

However, the bunching up of the issues in May and June is due to the fact that most companies are busy in the first month devising new tax saving strategies.

In April, companies are mostly busy devising new tax saving strategies. Usually, it is also the time for the companies to plan new investments. The activity will start from May and this time the market is on an all-time high, says BP Singh, executive chairman of Beeyu Overseas Ltd, a tea trading outfit that is planning its second issue.