New Delhi [India], October 1 (ANI): The Indian secondary market is nearing bottoming-out levels and could see positive momentum in the coming days, while a slowdown in IPO activity after the August-September rush may provide some support to the market, Astha Jain Shah, Senior Research Analyst at HEM Securities, said.
Speaking to ANI, Shah said the number of IPOs coming to the market could moderate in the coming months after the unusually high activity in August and September. She attributed the rush partly to regulatory requirements from October 1, under which companies would need to redraft or refile prospectuses with updated financials.
“Some sort of slowdown can be witnessed in the primary market activity in coming months. So that can be one of the reason that may lead to some sort of a positive activity in the secondary market,” Shah said.
Around 23 IPOs came to the market in August, while the number rose to about 32-33 in September. The IPO pipeline, however, remains strong, with Jio Platforms expected to come to the market before Diwali, although the exact date has not been confirmed.
Market speculation points to an October-November window. The company plans to issue up to 27 crore equity shares, entirely through a fresh issue, with no offer for sale (OFS).
Despite the high number of issues, Shah said valuations remained a key consideration for investors, with around 70-80 per cent of IPOs during the two months being reasonably valued.
“Valuation is one of the major concern which we are seeing,” Shah said, adding that merchant bankers had increasingly become aware of the valuations investors were willing to accept.
She said the primary market could remain active going ahead, but the pace seen in August and September may not continue. At the same time, the upcoming results season could influence sentiment in the secondary market.
“Results season is also on. I think going ahead from 10 days or 7 to 8 days from now, we will start seeing the results kicking in. So definitely they will also set the mood for the secondary market,” she said.
Shah said the combination of moderating IPO activity and corporate earnings could help the secondary market recover. “I believe that the markets are now near the bottoming out levels and very soon we will be seeing markets on a northward direction,” she said.
On foreign portfolio investor flows, Shah said foreign investors would remain important for the market’s next phase of movement. She said a strengthening rupee could improve FPI sentiment, particularly as weaker currency, higher crude prices and a stronger dollar have been weighing on the market environment.
“FPI role is very very important,” Shah said, adding that any positive momentum in the currency “will definitely help them to come again in our market and give our markets a very, very strong upside movement.” (ANI)
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