Money on the markets

A maturing market amid the mayhem

Investors and the IPO craze


The UPA government’s deferred divestment programme seems to have had a smooth take-off. State utility NHPC’s IPO was subscribed 23.5 times at close.

INDIA ENERGYThis is to be followed by an offering from another state heavyweight, Oil India Ltd, on September 7. But what do these high decibel IPOs mean for the stock market and small investors in particular?

On its part the government hopes to raise 18.54 billion rupees ($386 million) from stake sales in the two firms this fiscal. Its efforts bolstered by an upbeat stock market that has risen over 90 percent from 2009 lows in early March mainly on an influx of foreign funds.

Small investors are likely to flock to these state-backed IPOs because of their attractive pricing and a good track record. “The perception is that they leave something for investors on the table,” says VK Sharma, head of research at Anagram Capital.