MUMBAI, Dec 29: Despite dwindling industrial output, declining exports, ballooning fiscal deficit, gloomy economic atmosphere in domestic and international markets amid fear of European debt crisis, the stock market remained resilient as the BSE sensitive index Sensex posted impressive gains of 3,927.84 points, or 24.5 per cent, at 19,444 against preceding year-end’s close of 15,517.00.
The National Stock Exchange’s Nifty also spurted by 1,271.84 points or 26.5 per cent to 5,908.35 from previous yearend’s close of 4,636.75.
Investor wealth soared by 27 per cent to around Rs 67.7 lakh crore (Rs 67.7 trillion) in 2012 as the stock Indices rose nearly 25 per cent on hefty capital inflows and of late a slew of reform measures even as concerns remain over economic growth and rising fiscal deficit.
Indian bourses made a dramatic turnaround after a meltdown in 2011, leaving behind strong optimism about a bullish 2013 in hopes of Reserve Bank of India rate cut, hefty capital inflows, a recovery in global economy and excellent earnings growth in the third quarter of 2012-13.
The Q3 earnings, which are most likely to beat the market pundits, indications of more reforms by the United Progressive Alliance government and hopes of increase in retail participation in quality IPO/FPO and OFS in the near future expected to augment the bullish fervour in 2013, an analyst said.
Foreign Institutional Investors (FIIs) have made the second largest investment in the Indian capital market in the year under review.
FIIs has pumped in Rs 1,21,652 crore this year till December 29,as per the data issued by Securities and Exchange Board of India (SEBI). Previously, they had made biggest investments of Rs 1,33,266 crore in equities during 2010.
While retail investors were not benefitted either in the secondary market IPO market and were seen selling their holdings, as a result the public ownership in the India Inc came down to 6-7 per cent as against a high of 15 per cent 2007, he said.
Though the Sensex could not surpass its all-time peak registered on Jauuary 8, 2008 at 21,078, the sectoral indices like BSE-FMCG, BSE-HC, BSE-CD and BSE-Auto logged their historical highs during the year on hectic buying by foreign funds.
The rally in the month was driven by strong global cues on hopes of some stabilidation in the Europe and gradual improvement in the US economic data.
On domestic front, the government’s decision to allow Qualified Foreign Investors to invest directly in local equities from January 15, 2012 and signs of more foreign funds inflow also underpinned sentiment.
Because of the Assembly polls in five states, the Union Budget, was delayed this year and failed to enthuse the investors and plans to revive the economy.
The market remained sluggish for the next few months due to slowdown in gross domestic product growth, worries over macroeconomic conditions due to higher global crude oil prices, as India imports two-third of its oil consumption, rising trade deficit, weakening currency and global uncertainty.
Fears that reform process may take back seat after the ruling Congress party suffered a setback in some states in March and cut in China’s growth target also weighed on the market sentiment.
Announcement of reform measures such as allowing Foreign Direct Investment (FDI) in multi-brand retail and downsizing the LPG subsidy by the government later pushed the Sensex higher since September.
On the global front, barring China which ended in the red, rest of the other Asian markets ended firm. European as well as US stocks too exhibited strong trend this year.
This year, the corporates took a knock and came knocking at the doors of banks. Air India, Kingfisher and Suzlon approached banks to get their loans restructured.
The sale of United Spirits to Diageo, the biggest inbound M&A deal of the year for the country, took over the business news channels for major part of the year.
Miners’ case certainly kept everyone guessing this year. If 2011 was bad due to the ban on iron ore mining operations in Karnataka, 2012 was far worse. All the hard lobbying to resume mining in Karnataka barely yielded any results and to make matters worse a similar ban was imposed in Goa as well.
Essential drugs are getting cheaper. But there have been lots of twists and turns in this sector. The Draft Pharma Pricing Policy was introduced way back in October 2011. But it was just the tip of the iceberg which melted into a veritable deluge from drug pricing, to FDI in pharma, to patents, to compulsory licensing.
The fund mop-up by companies through sale of shares has crossed Rs 30,000 crore mark in 2012 despite a volatile market and the figure is expected to be much higher next year, given a strong line-up of capital raising plans through IPOs and other equity issuance routes.
Besides plans for initial public offers (IPOs) amid improving market sentiments, a large number of already-listed companies are expected to tap ‘offer-for-sale’ route in 2013 to raise funds to comply with a regulatory requirement of minimum 25 percent public shareholding.
More than a dozen companies, including Just Dial and Videocon D2H, have already filed their draft IPO offer documents with market regulator SEBI and would look to sell shares some time in 2013.
Many others, including retail chain operator Spencer’s, Hero Cycles and satellite TV broadcast services of Tata Sky are also said to be looking to tap the IPO market.
In the year 2012, around Rs 30,500 crore were mopped-up through share-sale programme and major chunk of funds, which was Rs 23,800 crore, garnered through OFS route, and the remaining about Rs 6,693 crore through IPOs. In comparison, there were 37 IPOs and 2 FPOs in 2012. The total fund raising through public issues was about Rs 14,000 crore, including Rs 8,137 crore through FPOs.
Although there was a lull in the first half of 2012, the share sale activities bounced back towards the end of the year on the back of a slew of reform measures initiated by the government and SEBI to revive the stock market.
Interestingly, listed companies shunned the idea of garnering funds through the traditional methods of share sale like follow-on public offer (FPO) and opted for OFS route owing to volatility in the equity market.
Since its introduction by the market regulator, 20 Indian companies have already raised Rs 23,800 crore through the OFS route,the largest being Rs 12,666 crore issue by state-run oil producer ONGC in March, followed by NMDC stake sale in December yielding Rs 6,000 crore.
Other major OFSs include Reliance Power Rs 1,500 crore, Bluedart (Rs 950 crore), Hindustan Copper (Rs 808 crore), Wipro (Rs 750 crore), DB Corp (Rs 421 crore), Adani Power (Rs 193 crore) and Fresenius Kabi Oncology (Rs 114 crore).
All private listed firms are required to attain a minimum public shareholding of 25 percent by June 2013, while public sector units have more time, August 2013. Besides, the state- run listed firms are required to have at least 10 per cent held by the public.
The rules have to be adhered to within this timeframe, failing which action will be taken by the market regulator.
After a lacklustre first-half, when nine firms raised a total of Rs 6,601 crore, the second-half saw the year’s largest public issue (Rs 4,200 crore) by Bharti Infratel. it, however, declined by 13 per cent on debut,
The tower company’s IPO is the largest since Coal India’s Rs 15,475 crore IPO in October 2010. Other major IPOs in 2012 included MCX’s Rs 663 crore public issue, PC Jewellers (Rs 601 crore) and Care Ratings (Rs 540 crore).
Additionally, 12 companies hit the small and medium enterprises (SME) platforms of BSE and NSE to raise a total of Rs 92 crore through their IPOs in 2012. However, a few companies including packaging materials maker Plastene India and auto parts manufacturer Samvardhana Motherson Finance shelved their IPO plans due to weak market.
Analysts said that IPO market have started showing signs of revival owing to reform measures being undertaken by the government and regulator SEBI and expect buoyancy in the secondary market in 2013, which would make the markets attractive.
‘Even in a buoyant market, the success factor for IPO/FPO continues to be the strength of the company, the sector and the pricing of the issue. Enough lessons have been learnt by the IPO managers during 2012. We expect much more matured pricing of IPO/FPOs in 2013,’ Analysts said.
SEBI has also announced various other IPO market reforms, steps for enhanced distribution network, incentives for brokers, bidding through electronic IPO platforms and allotment of a minimum lot of shares.
(UNI)
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