The primary market is loosing its sheen with the money raised from the initial public offers going down eight times in the first seven months of this year compared to the same period last year.

The reason: Falling stock markets. The Bombay Stock Exchange's benchmark Sensex has fallen 30 per cent since January, dampening investor sentiment.

Hence, only 25 small IPOs hit the market in the first seven months raising Rs 4,345 crore (Rs 43.45 billion), while the same period last year saw 65 IPOs raising Rs 32,993 crore (Rs 329.93 billion), according to Prime Database, a firm tracking the primary markets.

Another striking difference is that many companies have allowed their IPO approvals to lapse.

Losing sheen

• 25 small IPOs hit the market in the first seven months this year raising Rs 4,345 crore, while the year-ago period saw 65 IPOs raising Rs 32,993 crore
• Eight firms, collectively planning to raise Rs 4,772 crore, have withdrawn their offer documents since January 2008
• Prime expects nearly 12 companies to allow their approvals to expire

Earlier, the capital market regulator's (Securities and Exchange Board of India) nod for the IPO was the last hurdle. But not any more.

In recent months, as many as 22 companies planning to collectively raise Rs 16,539 crore (Rs 165.39 billion) have allowed their IPO approvals to lapse.

This includes some big names such as Jaiprakash Ventures (Rs 4,000 crore), Reliance [Get Quote] Infratel (Rs 4,000 crore), UTI Asset Management (Rs 2,000 crore), Acme Telepower (Rs 1,200 crore), Multi-Commodity Exchange (Rs 600 crore) and Vascon Engineers (Rs 350 crore), according to Prime. And the bad news doesn't stop there. As many as eight companies, collectively planning to raise Rs 4,772 crore (Rs 47.72 billion), have withdrawn their offer documents since January 2008.

The current market situation too has not helped improve investors' sentiment. Prime expects nearly 12 companies, which plan to raise Rs 3,643 crore (Rs 36.43 billion) and are currently holding valid Sebi approvals, to allow their approvals to expire.

The companies with Sebi approvals include Mahindra Holiday Resorts (Rs 1000 crore), DB Corporation (Rs 1000 crore), Cox & Kings (Rs 400 crore) and RITES (Rs 350 crore).

According to norms, a company is required to enter the market within 90 days of receiving the approval.

"The demand for new paper is obviously very weak in a market like this. When there are no buyers for already listed stocks, which have a proven track record in the public domain, why would any one risk his money on untested stocks?," said Prime Database chairman and managing director Prithvi Haldea.

About 32 other companies, which are planning to raise Rs 18,175 crore (Rs 181.75 billion), have filed their DRHP with Sebi and are awaiting its approval. This list includes some big names like Adani Power (Rs 5,630 crore), Future Ventures (Rs 2,660 crore), Bharat Oman Refineries (Rs 2,400 crore), NHPC (Rs 1,670 crore) and Oil India (Rs 1,400 crore) Godrej [Get Quote] Properties (Rs 750 crore) among others.

According to Prime Database, nearly 500 companies are planning to go for an IPO. This includes companies like Avesthagen, Bhilwara Energy, BPTP, Essar Power, GMR Energy, ICICI [Get Quote] Securities, Indian Railway Catering, Lodha Builders among others.

Haldea believes that divestments and IPOs from PSUs at attractive prices could pull back investors easily. "Once the momentum starts, the sentiments would improve. We have seen this happen in the past; it can happen again,'' Haldea said. "With credentials not under question and with the right pricing, PSU IPOs can become the harbinger of good markets," Haldea said.