Response to NTPC FPO lukewarm due to mkt correction: Enam

78683 Investors following NTPC. Share this News with them.

0

Like this story, share it with millions of investors on M3

Response to NTPC FPO lukewarm due to mkt correction: Enam

The NTPC follow-on public offering (FPO) was subscribed 1.2 times overall. In an interview with CNBC-TV18, Pradip Baijal, Former Secretary, Department of Divestment and Dharmesh A Mehta, MD-Institutional Equities, Enam Securities, discuss why the issue was poorly subscribed.

Post your opinion here

 

0

Tweet

Share on Tumblr

Excerpts from Bazaar on CNBC-TV18 Watch the full show » RELATED NEWS NTPC FPO pricing could jolt divestment programme: Tulsian Bouyant NTPC says FPO fully subscribed Hold NTPC with long term perspective: Betadpur Hold NTPC: Betadpur ALSO READ See what other experts are saying about markets See what FIIs are saying about the markets See what Udayan Mukherjee is saying about the markets NTPC BSE | NSE 29/05/12 Are Mutual Funds betting on NTPC?

Q: Are they still scare the institutional guys or have nerve settled after the experience of last week with the news of Greece, Spain, etc?

Mehta: There is still uncertainty out there in the world so I won't say that it settle down. People will still look for global cues and what is happening in the next two-three days. US data numbers had been better than what people expected in the last two-three days. This should give them some signs of hope.

In this kind of risk aversion, people will not be very brave enough to take decisions. Hence, they do not have any performance to bag themselves to take additional risk. So every body will play by the year going forward.

Q: You see these outflows continuing. Are these cash calls which are being taken or cash creations calls which have been taken or is there a bit of arbitrage unwinding which happened a couple of weeks back?

Mehta: There is more of a cash call. People just want some liquidity now. Last one year had increased their exposure to equities. Hence, people are cutting back down and increasing the cash levels in case they see some turmoil in the European markets which has been there in the last week. So it is just a risk aversion. Liquidity is still out there. I do believe that the liquidity is gone back.

Q: Any either problem that these investors are facing where you have to choose between whether you want to be a part of an primary market process or you want to save that cash for a secondary market buy?

Mehta: I do not think there is any choice between both. They want to sit on cash and wait for this entire game to play.

Q: Would you say most of that has unwound though because it is important to understand what happens over the next few weeks? There are still a lot of these primary market issuances that go through before the Budget?

Mehta: People will look for the Budget as a call in the market. Budget will set the new trend and decide whether it is going up or down for the Indian markets. Till that time, people will definitely like to have some cash. In case the Budget has been good they can invest immediately and if not then they are sitting on some cash and save themselves from any fall. It is a tough call right there.

Q: Is there any churn going on between secondary and primary where people who want to participate in the large primary offerings are taking a bit away from the secondary market?

Mehta: No. I do not think that is happening right now. I do not think so primary market, except NTPC, has got such large offerings coming in especially with the budget round. Then you will see REC which hopefully should get a good response if priced properly. Hence, I do not think that choice is between selling secondary and going into primary. It is just sitting on cash.