IPOs by PSUs can revive capital market: Chamber

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New Delhi, Oct 19 (UNI) An overwhelming majority of financial honchos of India incorporate want State-owned corporations to float initial public offers (IPOs) to regain investor's confidence in the capital market which plunged to over two-year low to four digits over the weekend.

The widely tracked 30-share Sensex on Friday nosedived to below the 10,000-level for the first time since July 2006 and finally closed 606 points down at 9,975 points.

While it took more than two years for Sensex to move from 10,000 to 21,000 in January 2008, it took just three quarters to slip back all the way.

As many as 65 per cent of chief financial officers (CFOs) contacted by an industry chamber to suggest ways to help India come out of its ongoing liquidity crisis, felt that government should encourage its central utilities to float IPOs to regain investor's confidence in the capital market.

''The Indian capital market is currently facing not only the reality crisis but also confidence crisis,'' Assocham said.

''The only way out left is to inspire public sector undertakings to float IPOs as majority of investors have larger faith and confidence in PSUs equities,'' felt 195 CFOs out of total 300 contacted by the apex chamber for revival of investors confidence in stocks.

The vast majority of CFOs argued that in 2002, when the domestic corporate market was enduring depressed sentiments in the financial market, Maruti Suzuki had come out with an IPO which was successfully oversubscribed and succeeded in winning back the investor's confidence.

About 175 CFOs suggested that it is the right time for PSUs such as National Hydro Power Corporation and Oil India to come out with their IPOs to raise money from the market as majority of investors are looking for ''safer investment channels having sovereign guarantee''.

Both the State-owned utilities have necessary approvals for IPOs but are stuck in their administrative Ministries on issues of pricing.

''Nearly 200 CFOs from corporate world representing real estate, consumer durables, steel, cement, engineering, automobile, infrastructure and oil and 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,'' survey by the industry body said.

The survey said though the Central Government and Reserve Bank have taken decisions to revive market sentiments, yet these steps have not yielded required results and, therefore, the government ought to motivate PSUs to go to market, float IPOs and win back confidence of investors.

About 150 CFOs said liquidity is a major problem for infrastructural projects and capacity expansion as also for banks and until a way out is found out, it will get further compounded. They also suggesed floating of IPOs, especially of quality IPOs by government undertakings, to revive market sentiments and gain in confidence of investors.

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

UNI SAA SBA CS1211

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