Whose Fault Is It Anyway? ; Ipos Will Make You Rich Overnight. Really? See These Graphs? They Are Price Charts of Companies That Made Ipos Recently. An Inside View of Ipo Valuations, Spin Masters and What Lies Beneath.

Business Today › December 19, 2005

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Summary

It's been a spectacular bull run. Spectacular not just in terms of how long it has lasted but also in terms of the huge earnings that investors have made. This particular bull run has also been significant for another reason. It has seen unprecedented money flowing into the primary market. Take a look at this: from a mere Rs 2,307 crore in 2003-04, the capital mobilised through fresh issues skyrocketed to about Rs 14,869 crore in fiscal 2004-05. More; it is estimated that from January 2004 to today, investors have made a net gain of roughly Rs 19,500 crore just on primary market investments where the issue size was at least Rs 100 crore.

If that's the case, why is everybody crying wolf on IPOs and the primary market? Shouldn't investors be kicked with the sheer volume of riches they are supposedly raking in? Unfortunately, it has not been a story of unmitigated gain alone. A significant portion of the earnings has gone to institutional investors, with retail investors managing to corner only a small share. Worse, a large number of retail investors have made heavy losses.

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Whose Fault Is It Anyway? ; Ipos Will Make You Rich Overnight. Really? See These Graphs? They Are Price Charts of Companies That Made Ipos Recently. An Inside View of Ipo Valuations, Spin Masters and What Lies Beneath.

While some of the blame for this can be laid at the door of poor regulation, heavily speculative practices of institutional buyers, and the suspected rigging of listing prices, the average Joe investor cannot shrug off all responsibility. Cupidity compounded by stupidity seems to have been the guiding principle when it comes to investing in the primary market. There has been little attempt at independent stock research, people have just rushed blindly after anything ...

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