Primary market activity was robust not only in the first half of CY21, but also in the last one year, mirroring the bullish secondary market that soared to a record in June 2021.
The major reason behind stellar performance is ample global liquidity that is available because central banks kept interest rates low to revive pandemic-hit economies.
Better-than-expected corporate earnings and improving economic data along with the pick up in vaccination boosted market sentiment.
The first half of CY21 (1HCY21) was so strong that both fund raising and the number of IPOS were higher than the entire CY20. Twenty-four companies launched their IPOS in the first half of CY21 to raise Rs 39,000 crore while in CY20, 16 companies raised Rs 31,128 crore through IPOs.
"Performance of the IPO market usually has a strong correlation to the performance of the secondary market. If the secondary market is bullish, it attracts large investor into IPOs. New investor is lured by high return in the IPO market," Gaurav Garg, head of research at CapitalVia Global Research told Moneycontrol.
"Indian fundraising via IPOs is at a 13-year high because of a flood of foreign money and unprecedented interest from retail investors as well. This has made India one of the hottest IPO markets in 2021," he said.
He said Indian companies have raised $2.2 billion through IPOs so far this year, the highest since 2008. "That follows $9.2 billion last year, the third biggest behind the United States and China, thanks to a flurry of listings in late 2020."
PowerGrid Infrastructure Investment Trust that raised Rs 7,735 crore was the biggest IPO in terms of fund raising in 1HCY21, followed by Sona Comstar, Rs 5,550 crore; Indian Railway Finance Corporation, Rs 4,633 crore; Brookfield India REIT, Rs 3,800 crore; Macrotech Developers, Rs 2,500 crore; and KIMS Hospitals, Rs 2,144 crore.
In terms of subscription, six IPOs -- MTAR Technologies, Nazara Technologies, Easy Trip Planners, Shyam Metalics, Indigo Paints and Laxmi Organic Industries - witnessed robust response from investors. They were subscribed 100 to 200 times.
In 1HCY21, the BSE Sensex rallied more than 10 percent, while the BSE Midcap index surged 26 percent and Smallcap index shot up 39 percent. All sectoral indices participated in the run up.
Experts feel the primary market activity is largely expected to remain robust in the second half of CY21 also, with fund raising likely to exceed the level seen in the first half of the year.
"As the markets trade at record high levels, we will keep on seeing more companies hitting the primary market as overall positive sentiments are very important for success of any initial offering," Gaurav Garg said.
Prashanth Tapse, VP Research at Mehta Equities, also expects primary offerings to pick up again in the second half of 2021 as markets are at an all-time high and it's an ideal time for promoters to encash the euphoria.
Astha Jain, Senior Research Analyst at Hem Securities also agreed with Tapse and Garg, saying approximately Rs 45,000 crore worth of IPOs are expected in months.
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