Sensex hits lifetime peak on continuing exuberance

Take the example of the IPO of little-known Wonderla Holidays, which has emerged as a big success. The company is promoted by Kochouseph Chittilappilly who incorporated V-Guard Industries (makers of voltage stabilisers and other electrical appliances).

Wonderla Holidays  sought to raise Rs 180 crore through its IPO. When it closed on Wednesday, investor interest surpassed 38 times the  issue size.

While the high networth individual portion of the issue got subscribed 159 times, the retail segment too witnessed a subscription of over 7 times. The qualified institutional buyer portion was subscribed 16.7 times.

The last time an IPO attracted this level of investor interest was in the issue of Punjab & Sind Bank in December 2010 that was oversubscribed 50 times, according to data from Prime Database.

“There was no confidence in the markets during the last four years but now it is coming back. Investors are looking forward to May 16 where it is expected that BJP-led coalition will come to power with a strong mandate,” said CJ George, CMD, Geojit BNP Paribas Financial Services.

He added that even the retail participation has gone up significantly. “We have witnessed a 60 per cent year-on-year increase in number of investors trading on a daily basis.”

Even as there are concerns on China’s growth with industrial output shrinking for the fourth straight quarter, Indian markets continued to ride on the upbeat sentiment in anticipation of a recovery in investment cycle.

“A slowdown in China may have a bearing on commodity prices that may soften and since India is a net importer of commodities, it may be beneficial,” said SN Lahiri, head of equities at L&T Mutual Fund. “While the GDP growth has slipped, earnings for companies have stabilised over the last two quarters and a stable government is expected to bring better governance and reforms,” said Lahiri.

An equity strategist with a leading global financial services firm said that the rise is backed by the fact that the worst is behind and the outlook has started to turn around. “India is looking good and sectors that are doing well are finance, industrial and materials as there is expectation of recovery in investment cycle once a government is formed with a strong mandate,” the strategist said.