Fiscal 1997 marked by quality issues

Although the number game is still not in favour of the primary market, the financial year 1997 shows some positive signs. After Sebi's stiff entry norms came into effect since April 1996, there has been a significant drop in the number of new issues. However, in terms of quality, primary market provided enough opportunity for retail investors who turned sceptic after burning their fingers in sundry and all issues in the past. According to a SBICAP report, the quantity of paper on offer has decreased, but there has been dramatic improvements in quality led by banking stocks.

During the fiscal, the banks accounted for a sizeable chunk of money raised from the primary market. ``The banking sector continues to be popular after successful issues of Bank of Baroda and Bank of India,'' says the report.There also are other positive signs for the primary market. Of the four issues listed in April 1997, two were listed at a premium to their offer prices. The premium on the listing was maintained for a few days.

During the fiscal, of the Rs 22096-crore money raised through capital market, Rs 12910 crore was from public issues and Rs 9185 crore was from rights issues. The fiscal also saw a drop in equity instruments which accounted for 70.5 per cent of the total funds mobilised as compared with 82.1 per cent in the previous fiscal.

Textiles sector still commands investor acceptability. According to the report, this sector is expected to perform well on account of low cotton prices. Although finance companies still dominate the primary market, there is low investor appetite for these issues.

As far outlook for the primary market is concerned, SBICAP is optimistic as interest rate on deposits have been cut and equities should now turn more attractive.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.