MUMBAI, July 8: The buoyancy in the secondary market notwithstanding, the primary market continues to languish. The first quarter of the year has seen a 92 per cent decline in amount mobilisation and an 88 per cent fall in the number of issues.

According to a study conducted by Prime Database, the country's leading primary market database, the first quarter of the current fiscal has seen only 37 public issues raising a meagre Rs 198 crore compared to 305 issues aggregating Rs 2,342 crore in the corresponding quarter of the previous fiscal.

June has seen a mere Rs 52 crore being mobilised from the primary market. This is lower than Rs 72 crore in May and Rs 73 crore in April. This was a substantial fall from Rs 1132 crore in March, Rs 826 crore in February and Rs 1651 crore in January this year.

According to Prithvi Haldea of Prime, the loss of investor's faith in the primary market has ofcourse been a reason for the lull activity.

``Compounding this is the impact now being severely felt of the extremely stringent entry barrier guidelines introduced by Securities & Exchange Board of India (Sebi) in April 1996, which have choked the market and have prevented even the profit making companies to win back the investors confidence'', he says.

Significantly, the current quarter was marked by a total absence of debt issues which incidentally had dominated the entire previous year. Also missing were any mega equity issue, both from the public and the private sector. The largest issue of the quarter was from Madras Fertilisers aggregating Rs 43 crore.

Meanwhile, Sebi received only one offer document amounting to Rs 1.30 crore during June 30-July 4, that of Mallcom (India). As per Prime, premium issues continued to stay away from the market with only one issue in June (Suzlon Fibres at a premium of Rs 5).

In the last 8 months there have been only 10 premium issues, 3 of which have been from the public sector. Small finance companies continued to enter the market. In June for example, 38 per cent of the total mobilisation was by such companies.

According to Haldea, the future remains bleak as is evident from the rapidly declining public issue documents being filed per month with Sebi. While an average of 120 public issues had been filed per month in the January-August 1996 period, the same had fallen to only 16 per month in the September, 1996-January, 1997 period. The average has slumped to 6 per month in the period February-June 1997 period.

No mega or even medium-sized issues from the private sector are lined up in the next few months. The forthcoming issues of note are only from the public sector and that too for debt from financial institutions or equity from the banking sector. This includes Rs 304 crore issue of Corporation bank and Rs 152 crore issue of ICICI Bank. ICICI is divesting 25 per cent stake in the private sector bank and the offer of sale to the public is at a premium of Rs 25. The issue is slated to open in the first week of August.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.