Commodity Online
NEW DELHI: Can initial public offerings (IPOs) by public sector undertakings revive the plunging BSE Sensex? According to a survey done among Chief Financial Officers (CFOs) by Associated Chambers of Commerce and Industry (ASSOCHAM), 65% felt this is the best option to regain investor confidence in the capital market.

The vast majority of Chief Financial Officers argued that way back in 2002, when the domestic corporate market was enduring depressed sentiments in the financial market, Maruti Suzuki came out with IPO which was successfully oversubscribed and succeeded in winning back the investor’s confidence.

The Indian capital market is currently facing not only the reality crisis but also confidence crisis as retail and other investors have lost confidence in stocks for parking their surpluses which are rotting inside their lockers and the only way out left is to inspire PSUs to float IPOs as majority of investors have larger faith and confidence in PSUs equities, felt 195 CFOs out of total 300 that ASSOCHAM got in touch with for revival of investors confidence in stocks.

About 175 CFOs have given a prescription that well known PSUs such as NHPC and Oil India Ltd., IPOs have necessary approvals but are stuck in their administrative Ministry on the issues of pricing. According to them, it is the right time for PSUs to come out with their IPOs to raise money for their required objectives as majority of investors are looking for safer investment channels having sovereign guarantee in one way or other.

Nearly 200 CFOs from corporate world representing real estate, consumer durables, steel, cement, engineering, automobile, infrastructure and oil & gas recommended that good quality IPOs especially from public sector undertakings will receive enthusiastic response at reasonable price from all investors, be it retail, institutions and even FIIs.

The responses of the CFOs were collected under ASSOCHAM Capital Market Chairman, Prithvi Haldea and released here today by its President, Sajjan Jindal also say that the central government and Reserve Bank of India have been consistently announcing decisions to revive market sentiments to uplift capital market. However, these have yet to yield required objectives and therefore the government ought to motivate PSUs to go to market, float IPOs and win back confidence of investors.

The majority of financial officers were of the view that real and serious investors are looking for investment channels and cautiously avoiding investments on scripts, not even bullion and are now finding traditional channels of investments lucrative enough for investment point of view and their money is rotting in their shelves.

One hundred fifty CFOs said that liquidity is a major problem for Indian Inc. especially for infrastructural projects and capacity expansion plans, it is equally a problem for banks and until a way out is found out, the liquidity problem will get further compounded and therefore, floating of IPOs especially of quality IPOs of government undertakings are recommended to revive market sentiments and gain in confidence of investors.

The IPOs that would attract the investor’s attention at this juncture could be power sector, oil & gas, railways, housing and construction projects as these areas need expansion, modification and upliftment and the public will be all out to support their capex ventures, said over 100 CFOs.

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