The Hindu : Business : IPO outlook remains bleak

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Tuesday, Jun 17, 2008
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IPO outlook remains bleak

Special Correspondent

NEW DELHI: Weak investor sentiment in stock markets, easier ECB (external commercial borrowing) norms, high inflation rate and economic slowdown have made the overall outlook bleak for the IPO (initial public offering) market in 2008.

This is the finding of an Assocham Eco Pulse (AEP) Study “IPO Outlook 2008”, which also notes that companies have been shying away from the primary market as the number of new offerings dropped to mere one each in April and May.

Drop in primary issues

Released on Monday, the study also says that a large number of companies are planning to postpone their investment plans or opting for external borrowings primarily because of the difficult time the economy is going through.

Commenting on the findings, Assocham President, Sajjan Jindal, however, said that the situation in the IPO market could improve in the last two-three months of the year, if the economies in the U.S. and the U.K. come out of the recession cycle, and inflation comes down owing to base effect and steps taken by the government.

According to the study, the number of primary market issues declined to 19 in the first five months of the calendar year 2008 from 44 in the corresponding period last year, the amount raised being Rs. 16,258.50 crore.

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