MUMBAI, Dec 25: The new primary capital market witnessed a slump of 83 per cent during the first half of the current fiscal. New issues by non-government companies, government companies, banks and financial institutions during the first half of 1997-98 amounted to Rs 1,737 crore, said the Report on Currency and Finance, 1996-97.

Of this, issues by the private sector stood at Rs 1,695 crore which was lower by 76.5 per cent compared to the first half of 1995-96. The amount raised by corporates from abroad through Euro-issues at Rs 2,228 crore was also lower than Rs 2,348 crore raised in the corresponding period of the previous year.

During the first half of the current fiscal, there were no new issues by banks and financial institutions compared to Rs 1,200 crore raised by them during the comparable period of last year.

Only one government company accessed the market -- to raise Rs 43 crore-- during the first half of 1997-98.

This was sharply lower than the amount of Rs 1,842 crore raised by the government companies during the corresponding period in 1996-97. During 1996-97, both the primary and secondary segments of the Indian capital market remained subdued. New capital issues by the government and non-government companies during 1996-97 at Rs 18,854 crore registered a decline of 17.8 per cent over 1995-96.

Corporates and financial institutions however accessed the private placement market on a big scale.

Domestic mutual funds mobilised Rs 3,493 crore during the first half of the current financial year, in contrast to a negative mobilisation -- due to higher repurchases -- of Rs 991 crore in the corresponding period of the previous year.

The secondary segment of the capital market generally displayed a mixed trend. The monthly average of the RBI Index of Ordinary Share Prices, which stood at 1069.7 in March 1997, moved up to 1189.8 in August 1997, but declined moderately to 1115.5 in September 1997.

"While the positive mood in the stock market was influenced by the proposals in the union budget of 1997-98, declining interest rates, normal monsoon and higher net investments by the foreign institutional investors, the dull sentiment in the market has been attributed to lower industrial growth and political factors," said the Report on Currency and Finance for 1996-97, released by the Reserve Bank of India (RBI).

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.