IPO fever remains high

IPOs are clearly back in favour with the investors. After the success of TCS, all eyes were on the India Bulls issue that closed last week. The issue was sold out several times within the first five minutes of opening, on the back of some institutional heavyweights buying in. The retail pull has been good too. The success of these two issues and the successful listing of TCS is making the markets buzz about the next big issue, that of the power giant the National Thermal Power Corporation NTPC. Scheduled to open for subscription on September 23, the issue price is expected to be in the price range of Rs 30 to Rs 60 per share. Given that the issue size is Rs 5,000 crore and the market is saying that it will be oversubscribed, the Indian equity market is showing no signs of fatigue or lack of funds. Earlier in the year, there were concerns that these large ticket IPOs would suck the liquidity out of the markets. But it seems that the investors are willing to switch out of other investments into the IPO market. It seems unlikely that the IPO debacle of last time will be repeated as most issues are of good quality and from pedigreed promoters.

Inflation goes to a 4-year high
Riding on the back of the truckers8217; strike, the inflation figure for the week ending August 28 rose to 8.33 per cent, as compared to 3.88 per cent in the previous year period. This is the highest that we have seen inflation go to in four years. The overall trend is worrisome, even though higher inflation has not resulted in higher consumer prices expect for vegetables and fruits that have soared artificially high due to vendors jacking prices artificially of most major categories in the monthly groceries bill. What India may be seeing is the absorption of high input prices by the manufacturing sector to remain competitive in the market place. This is unusual, since India has a history of being a demand surplus remember the waiting time for a scooter? economy, the producers are used to passing off costs very fast. But this time it looks different. Over a decade of competition and market exposure is putting pressure on the manufacturing sector to go easy on the price transfer. But if this inflation trend persists, we may be facing higher prices eventually.