Equity stake, flexible terms attract talent from Wall Street firms to local peers.
According to data from AMFI (Association of Mutual Funds in India), Rs 12,079 crore (Rs 120.79 billion) came into the new schemes in January alone. In December 2007, inflows were to the tune of Rs 10,273 crore (Rs 102.73 billion).
Atherstone Capital Markets has come up with India IPO Index, which is an index of companies listed on the stock exchanges.
Most investors have become wary of placing fresh bets after the benchmark Bombay Stock Exchange's Sensex lost more than 3924.19 points, or 19 per cent, this year. The Sensex meltdown has also impacted the number of investments in the growth mode because earnings growth in several sectors has been affected indicating a cooling off effect on the economy.
While the Sensex fell by as much as 19 per cent from the recent peak, a host of fund houses were fully invested. A majority of the fund houses were sitting on cash amounting to 1 to 4 per cent of their portfolios against an average of 5 to 7 per cent, data from Value Research, a fund tracking company suggested.
Corporates are foraying into portfolio management services, with biggies like Reliance Money, Bharti Axa, Tata Capital and others taking the plunge.
Half of the 10 IPOs to have hit the market since the beginning of this year have been from the real estate space. J Kumar Infra Projects, KNR Constructions, SVEC Constructions and the now withdrawn Emaar MGF are the worst hit, according to analysts.
Although West Asian investors have been active in India for long using private banks such as UBS, Credit Suisse and Morgan Stanley that invested across emerging markets, post-9/11, the US has been falling out of favour as investors count the risk that assets in the country could be targeted over security concerns.
Volatility in the secondary markets has forced some initial public offers to revise their price bands as markets continue to be plagued by liquidity problems.
If good stocks were available at throwaway prices, penny stocks found no takers. For instance, Hari Gundecha faced a strange dilemma. He had made profits, buying into Harig Crankshafts when the stock was quoting at Rs 1.30 a share but he could not exit the stock on Tuesday. The stock had run up to Rs 7.61 a share and was quoting at Rs 4.48 a share on Tuesday.
"With all kinds of stocks flying around, investing can't be a part-time job," says Bruce Greenwald, professor of finance at the Columbia Business School.
Fund houses ape peers' products to lure investors. Popular themes are banked on to attract investors' attention.
On December 17, Sebi put out a note on the introduction of new products in the futures and options segment. That was followed by permission for short-selling by institutional investors on December 20, stating that the securities lending and borrowing mechanism would be put in place along with short-selling, which will begin from February.
Sebi is planning to fast track mutual fund products. This move will speed up the approval process and help fund houses to cater to investor demands.
VCFs plan to disinvest their IT holdings to ITeS firms and gain from local markets
While the benchmark Sensex recorded 38 per cent gains during 2007, shares of most brokerage houses more than doubled (Geojit Financial increased by 130.68 per cent, while Almondz Global Securities rose 113 per cent) this year.
Technology, auto, FMCG and pharmaceutical stocks may be the most battered sectors of the Indian stock market this year. But select mutual fund schemes were able to notch up good returns despite being in these sectors by tweaking the investment mandate and smart stock-picking within the mid- and small-cap segments.
Indian asset management companies (AMCs) are likely to see a hefty spike in their valuations, after the last week's 5 per cent equity stake sale by Reliance Mutual Fund to US-based hedge fund Eton Park.
In spite of a curb on P-notes and markets being generally volatile throughout November, IPOs have bucked the trend by most of them getting listed at a premium. It seems that FIIs have entered more aggressively into primary market after this move.
With the listing of Reliance gold ETF on the National Stock Exchange (NSE) on Wednesday, four fund houses (Benchmark, UTI Mutual Fund and Kotak Mutual Fund being the other three) currently offer gold ETFs to Indian investors.
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