The primary concern for the markets today is the supply of paper which is coming in. It started with qualified institutional placements (QIPs), followed by global depository receipts (GDRs). Now, initial public offerings (IPOs) are starting and of course there is a big disinvestment calendar from the Government of India as well. Can the market absorb this kind of paper and what is the disinvestment calendar going to look like going forward? How will that impact the markets as well?
Commenting on the same, Uday Kotak, Vice-Chairman and Managing Director, Kotak Mahindra Bank, said that the markets would absorb paper at reasonable prices from good companies. He said that the demand in primary markets would positively impact the sentiment as he considers them to be vehicles for sensible capital formation. Demand from primary market could stop secondary market exuberance as well, he said, adding, “Successful issues are good for primary market and the economy.” He said that one could expect a much higher Sensex floor than early March. He sees the Sensex floor at around 12,000-13,000 levels. "Markets are likely to be range-bound in the near-term but must stabilise in a reasonable range," he added.
Vallabh Bhanshali, Chairman of Enam Securities also believes that the primary and secondary markets needed to co-exist. “I think it’s a self balancing mechanism.” He said, capital raising had begun after a long time and therefore, companies starving for money were rushing to raise capital at all price levels. “The markets are pricing capital in a sensible manner,” he said.
He further added, India was one of the few countries getting allocations, and therefore, there was enough appetite for Indian companies to raise money
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