TRENDS IN PRIMARY MARKET

The resources mobilised from the primary market in the first eight months of the current financial year (April-November 1998) were 2.86 per cent higher at Rs 2693.27 crore than the amount of Rs 2618.45 crore raised during the same period of previous year. So far 35 issues have been made in the current financial year which form less than half of the number of issues made during the same period of previous year, implying a significant increase in the number of issues of larger size during the current financial year compared to same period last year. Seventy six per cent of the capital raised in the first eight months of the current financial year however was on account of two financial institutions alone namely ICICI and IDBI which made five large issues to raise Rs 2050 crore.

Status of Offer Documents

During November 1998, the SEBI received 5 offer documents amounting to Rs 37.44 crore comparing with 2 offer documents amounting to Rs 499.55 crore during the same month in 1997. During the month under review, three offer documents amounting to Rs 50.89 crore were cleared comparing with six offer documents amounting to Rs 826.11 crore cleared during November 1997 (Table 1).

During the first eight months of the current financial year (April 1998 to November 1998), the SEBI received 39 offer documents for an amount of Rs.1045.52 crore and cleared 39 issues amounting to Rs. 1487.37 crore compared to 79 offer documents received for Rs 3555.24 crore and 77 offer documents cleared for Rs 2909.52 crore during April - November 1997. The decline in offer documents received and cleared is an indication of low investment activity in the industry.

Table 1: Trends in Offer Documents (Amount in Rs Crore)
 

	Apr.'98 – Nov.'98		Apr.'97 – Nov.'97		November '98		November '97
	No.	Amount	No.	Amount	No.	Amount	No.	Amount
Received	39	1045.52	79	3555.24	05	37.44	02	499.55
Cleared	39	1487.37	77	2909.52	03	50.89	06	826.11

Note: Figures are as on November 27, 1998

Source: SEBI

Capital Raised

As regards capital raised in November, 1998, one issue for raising Rs 4.5 crore opened as compared with seven issues for Rs 354.31 crore during the same month of previous year. During April-November 1998, there were 35 issues opened for collecting Rs 2693.27 crore compared to 82 issues for Rs 2618.45 crore during the same period in 1997 with an increase of 2.86 per cent eventhough the number of issues showed a steep decline (Table 2 ).

Table 2: Capital Raised During 1998-99(Amount in Rs crore)
 

	Apr.'98 - Nov.'98		Apr.'97 - Nov.'97		November '98		November '97
	No.	Amt.(cr.)	No.	Amt.(cr.)	No.	Amt.(cr.)	No.	Amt.(cr.)
Public	19	2443.76	50	1138.05	00	0.00	04	260.09
Rights	16	249.51	32	1480.40	01	04.50	03	94.22
Total					0	0	0

Source: SEBI

The activity of rights issues has been on the low ebb during the current financial year so far. During April-November 1998, there were 16 rights issues for Rs 249.51 crore as compared to 32 issues for Rs 1480.40 crore during the same period of 1997. In terms of percentage share, the share of public issues in total amount rose from 43.46 per cent in April-November 1997 to 90.7 per cent in April-November 1998 (Table 2). Analysis of month wise data of capital mobilised reveals that after two consecutive months of low capital mobilisation(May-June 1998) there has been a steep increase in the activity during July to October and then falling to rock botem during November, 98 (Table 3).

Chart 1: Capital Raised through Public and Rights Issues During 1998-99

Table 3: Month-wise Capital Raised(Amount in Rs. crore)
 

	Apr.'98 – Nov.’98		Apr.'97 – Nov.'97
	No.	Amount	No.	Amount
April	04	409.33	17	216.03
May	04	97.10	14	1104.06
June	05	100.39	21	124.94
July	06	365.52	08	173.89
August	04	333.08	07	193.88
September	09	973.51	03	28.42
October	02	409.84	05	422.92
November	01	04.50	07	354.31
Total

Source: SEBI
 
 

Trends in Large Issues
 
 

There were 5 large bond issues of Rs 2050 crore during April-November 1998, of which 3 issues of Rs.1300 crore each valuing at Rs.300 crore and one issue valuing at Rs 400 crore were issued by the ICICI. The IDBI made an issue of Rs 750 crore. During the corresponding period in 1997, there were 8 issues of Rs 100 crore and above each, amounting to Rs 1933.84 crore. This shows an increase of 6.01 per cent in large issues during the first eight months of the currency financial year over the same period in 1997.
 
 

Table 4: Mega Issues During 1998-99
 

Name of the Company	Type of Issue	Type of Instru.	Issuedate	Offersize (Rs. in Cr.)
The Industrial Credit & Invt.Corp.of India Ltd	Public	Bonds	27/04/98	300.00
The Industrial Credit & Invt.Corp.of India Ltd	Public	Bonds	16/07/98	300.00
The Industrial Credit & Invt.Corp.of India Ltd	Public	Bonds	27/08/98	300.00
Industrial Development Bank of India	Public	Bonds	21/09/98	750.00
The Industrial Credit & Invt.Corp.of India Ltd	Public	Bonds	26/10/98	400.00
Total				.00

 

Source: SEBI
 
 

Sizewise Analysis
 
 

During the month under review, the average size of the issue sharply fell to Rs 4.50 crore from Rs 50.62 crore for the corresponding month of previous year. The average amount raised per issue of Rs 76.95 crore during April-November 1998 however was higher than the average of Rs 31.93 crore in April-November 1997.
 
 

Table 5: Sizewise Distribution of Issues Opened During 1998-99(Amount in Rs crore)
 

	Apr.'98 - Nov.’98		Apr.'97 - Nov.'97		November '98		November '97
	No.	Amount	No.	Amount	No.	Amount	No.	Amount
<5 cr.	11	25.77	40	93.65	01	04.50	01	00.40
=>5cr. <10cr.	03	21.84	22	148.33	00	0.00	03	18.72
=>10cr. <50cr.	10	201.83	09	227.92	00	0.00	00	0.00
=>50cr. <100cr.	06	393.83	03	214.71	00	0.00	02	155.19
=>100cr. <500cr.	04	1300.00	07	1134.55	00	0.00	01	180.00
=>500 cr.	01	750.00	01	799.29	00	0.00	00	0.00
Total					0	00	0

 

Source: SEBI
 
 

Analysis of issues,

Listed and IPOs
 
 

In November 1998, only one listed company made one issue of Rs 4.50 crore compared with 4 issues of Rs 167.66 crore in November, 1997. There was no IPO issue as against three issues in November 97. In 1997, listed companies mobilised 47.32 per cent and the rest of the capital was raised by IPOs. For the first eight months of the current financial year, listed companies with Rs 2411.20 crore shared 89.53 per cent of the total capital raised. The IPO issues have witnessed declining trend during April-November 1998, market received 11 IPOs amounting to Rs 282.07 crore comparing with 46 IPOs amounting to Rs 934.87 crore in the corresponding months of previous year. The lower amount mobilised through IPOs is an indication of slack in entry of new units in the economy.
 
 

Table 6: Break-up of Issues into listed and IPO issues (Amount in Rs crore)
 

	Apr.'98 - Nov.'98		Apr.'97 - Nov.'97		November '98		November '97
	No.	Amount	No.	Amount	No.	Amount	No.	Amount
Listed	24	2411.20	36	1683.58	01	04.50	04	167.66
IPOs	11	282.07	46	934.87	00	0.00	03	186.65
Total					0	00	0

 

Source: SEBI
 
 
 
 

Chart 2: Type of Issues During 1998-99
 
 
 
 
 
 
 
 

Sectorwise Analysis
 
 

Sector Wise analysis reveals that only private sector companies raised capital in November 1998 while in November 1997 both private and public sectors were active. During April-November 1998, the market witnessed 32 issues of private and public sectors amounting to Rs 2589.95 crore comparing with 75 issues for Rs 2059.47 crore during April-November 1997. The resources raised by the other two sectors during the current financial year were small. The public sector had shared 20.12 per cent during corresponding period in the previous year (Table.7).
 
 

Table 7: Sector wise Breakup of Issues Opened During 1998-99(Amount in Rs crore)
 

Sector	Apr.'98 - Nov.'98		Apr.'97 – Nov.'97		November '98		November '97
	No.	Amount	No.	Amount	No.	Amount	No.	Amount
Private	32	2589.95	75	2059.47	01	04.50	06	280.87
Joint	02	33.02	03	31.11	00	0.00	00	0.00
Public	01	70.30	04	527.87	00	0.00	01	73.44
Total					0	00	0

 

Source: SEBI
 
 

Appraisal of Issues
 
 

In November 1998, there was only one issue of Rs 4.50 crore which remained unappraised whereas in November 1997, there were 2 unappraised issues amounting to Rs 253.44 crore. During April-November 1998, there were 24 unappraised issues (68.57 per cent of the total number of issues) amounting to Rs. 2444.59 crore(90.77 per cent of the total amount raised) as compared to 55 issues (67.07 per cent of the total number of issues) amounting to Rs.1342.45 crore (51.27 per cent of the total amount raised) in the corresponding period of last year. Out of 35 issues that entered the market during the current period, 24 were self-appraised, 1 was appraised by a bank, 2 were appraised by the financial institutions and 8 were appraised by the developmental financial institutions (Table 8).
 
 

Table 8: Project Appraisal Status(Amount in Rs crore)
 

	Apr.'98 - Nov.'98		Apr.'97 - Nov.'97		November '98		November '97
	No.	Amount	No.	Amount	No.	Amount	No.	Amount
Appraised	11	248.69	27	1276.00	00	00.00	05	100.87
Unappraised	24	2444.59	55	1342.45	01	04.50	02	253.44
Total					0	00	0

Source: SEBI
 
 

Region wise Distribution Analysis
 
 

Regionwise distribution of capital raised in November 1998 reveals(table-9), that there was only one issue which originated from Northern Region and other regions did not raise capital during November 1998, Whereas in the same month in 1997, all the four regions had raised capital.
 
 

Table 9: Region wise Distribution of Capital Raised(Amount in Rs crore)
 

Region	Apr.'98 – Nov.’98		Apr.'97 - Nov.'97		November '98		November '97
	No.	Amount	No.	Amount	No.	Amount	No.	Amount
Northern	10	173.81	11	177.86	01	04.50	01	73.44
Eastern	04	128.87	21	1076.75	00	0.00	01	81.75
Western	16	2272.89	35	760.81	00	0.00	02	180.40
Southern	05	117.70	15	603.03	00	0.00	03	18.72
Total					0	00	0

 

Source: SEBI
 
 

During April-November 1998, of the 35 companies which raised capital from the market, 16 belonged to Western region followed by 10 issues from northern region, 5 and 4 issues from southern and Eastern regions respectively. In terms of value, the Western region shared 84.39 per cent of the total capital mobilized during April-November 1998 compared with 29.06 per cent during the corresponding period of the previous year. During April-November in the previous year, Eastern region topped with 41.12 per cent of the capital.
 
 

Chart 3: Region wise Distribution of Capital Raised
 
 
 
 

Industry wise Analysis
 
 

Industry wise details of capital raised from the primary market are presented in Table 10. The analysis reveals that finance companies with Rs 4.5 crore accounted for 100 per cent of the total amount of capital raised from the market during November 1998. During November 1997, finance companies did not enter the market.
 
 

As regards the trends during the first eight months of 1998-99, banking and financial institutions with 9 issues amounting to Rs 2266.00 crore shared 84.14 per cent of total capital mobilised. The increase in number of issues as well as amount was dispersed over a large number of industry groups during the first eight months of previous year comparing with concentration over a industry groups during the current financial year .
 
 
 
 

Table 10: Industry wise Capital Raised(in Rs crore)
 

Industry	Apr.'98 - Nov.’98		Apr.'97 - Nov.’97		November '98		November '97
	No.	Amount	No.	Amount	No.	Amount	No.	Amount
Banking / Fis	09	2266.00	04	701.82	00	0.00	02	253.44
Cement & Const.	02	32.18	05	22.23	00	0.00	01	6.47
Chemical	02	36.50	04	196.69	00	0.00	00	0.00
Electronic	02	88.36	02	44.05	00	0.00	00	0.00
Engineering	02	2.31	05	61.81	00	0.00	00	0.00
Finance	05	27.02	18	69.33	01	4.50	00	0.00
Food Processing	02	21.10	03	76.41	00	0.00	01	6.25
Health Care	00	0.00	05	23.55	00	0.00	00	0.00
Info. Tech.	00	0.00	01	8.51	00	0.00	00	0.00
Metal	02	3.51	06	811.97	00	0.00	01	00.40
Mining	01	20.40	01	107.48	00	0.00	00	0.00
Misc.	02	7.50	14	139.79	00	0.00	00	0.00
Packaging	00	0.00	02	4.96	00	0.00	00	0.00
Paper & Pulp	00	0.00	01	06.00	00	0.00	01	6.00
Power	01	13.10	00	0.00	00	0.00	00	0.00
Telecom.	00	0.00	01	5.07	00	0.00	00	0.00
Textile	04	121.54	06	290.25	00	00.00	01	81.75
Tourism	00	0.00	02	28.10	00	0.00	00	0.00
Transport	01	53.75	02	20.43	00	0.00	00	0.00
Total					0	00	0

 

Source: SEBI
 
 
 
 

Instrument wise Analysis
 
 

Instrument wise details of capital raised indicate that during November 1998, only one equity issue was made. During the corresponding month of previous year, premium equity issues dominated the market accounting for 75.05 per cent of the mobilized capital. During the current period under review, funds raised through bond issues were the highest at 76.12 per cent followed by equity at 19.30 per cent whereas during the corresponding period of 1997.funds raised through equity issues were the highest with 59.66 per cent closely followed by OFCDs with 34.78 per cent. Thus fixed income instruments are getting priority in the order of preference of investors
 
 

Table 11: Instrumentwise Distribution of Capital Raised (Amount in Rs crore)
 

Type of Instrument	Apr.'98 - Nov.'98		Apr.'97 - Nov.'97		November '98		November '97
	No.	Amount	No.	Amount	No.	Amount	No.	Amount
Equity - par	14	157.44	51	217.79	01	04.50	02	6.65
- premium	11	362.42	24	1344.38	00	0.00	04	265.91
CCPS	02	37.21	00	0.00	00	0.00	00	0.00
FCDs	03	71.33	05	145.67	00	0.00	01	81.75
Bonds	05	2050.00	00	0.00	00	0.00	00	0.00
OFCDs (Openly.	00	0.00	03	910.61	00	0.00	00	0.00
Fully Convt. Debt)
& OF CDDs (Op. Fully
Convt. Discntd. Debt.)
OCCPS (Op. Convt.	01	14.87	00	0.00	00	0.00	00	0.00
Cumm. Pref. Shares)
Total					0		0

 

Source: SEBI

Notes: 1-Optionally Fully Convertible Debentures

2- Optionally Convertible Cumulative Preference Shares

Note: Number of issues counted on the basis of instrument i.e. if a company has offered more than one instrument, they have been counted as a separate issue.
 
 

Underwriting
 
 

As regards underwriting activity, there was no public issue during the month under review while in the corresponding month in 1997, there were 3 issues amounting to Rs 253.84 crore which were not underwritten. During April-November 1998, out of 19 issues only 4 issues were underwritten for Rs 140.22 crore forming 5.74 per cent of the total capital raised whereas during the same period in 1997, 8 out of 50 issues were underwritten for Rs 280.98 crore, forming 24.69 per cent of the total capital raised.
 
 

Table 12: Trends in Underwriting (Amount in Rs crore)
 

(Public Issues)	Apr.'98 - Nov.'98		Apr.'97 – Nov.'97		November '98		November '97
	No.	Amount	No.	Amount	No.	Amount	No.	Amount
Underwritten	04	140.22	08	280.98	00	0.00	01	6.25
Not underwritten	15	2303.54	42	857.07	00	0.00	03	253.84
Total					0	0	0

 

Source: SEBI
 
 

Under subscribed issues

As per the data available with SEBI as on December 2, 1998, from the post-issue reports from lead managers, there were 4 issues amounting to Rs.194.89 crore for the period April ’97 to November ’97 that were undersubscribed. However, later on they were subscribed. During the period April ’98 to November ’98, there were 6 under-subscribed issues amounting to Rs 107.87 crore, out of which 4 issues were later on subscribed.
 
 
 
 

TRENDS IN SECONDARY MARKET

Index Movement
 
 

The stock market witnessed higher volatility in the month of November, 98. The magnitude of Sensex volatility declined from 5.26 per cent in June to 1.93 per cent in October and rose to 2.6 per cent in November 1998. The Natex, and S&P CNX Nifty also witnessed increased volatility providing support to BSE Sensex movement. However, CNX Junior Nifty showed a declining trend in volatility during the month over the previous month. The BSE Sensex which opened at 2820.23 as on November 2, 1998, closed at 2810.66 as on November 30, 1998 recording a fall of 9.57 points only, whereas BSE 100 during the same period also registered a fall of 9.57 points. The sensex reached the high at 3027.20 as on November 11, 1998 and the lowest at 2741.70 on November 30, 1998, showing a variation of 285.5 points. The Natex reached a high at 1348.02 as on November 11, 1998 and the lowest at 1226.67 on November 30, 1998, showing a variation of 121.35 points. Thus, during the month under review, equity index varied either way to close moderately low.
 
 

The major indicies at NSEIL also showed wide variations during the month. The S&P CNX Nifty reached a high at 882.10 on November 11, 1998 and low at 800.10 on November 30, 1998, showing a variation of 82 points. The CNX Junior Nifty registered a high at 1475.70 on November 11, 1998 and a low at 1355.15 on November 30, 1998 showing a variation of 120.55 points.
 
 

Deliveries and Turnover
 
 

The average daily turnover at NSEIL and The Stock Exchange, Mumbai was Rs 1154.25 crore and Rs 1011.02 crore respectively. It shows a decline of 19.56 per cent at NSEIL and a decline of 18.66 per cent at The Stock Exchange, Mumbai. The daily turnover at The Stock Exchange, Mumbai reached a high of Rs 1271.37 crore on November 9, 1998 and a low of Rs 687.70 crore on November 21, 1998. At NSEIL, a high of Rs 1534.12 crore was registered on November 11, 1998 and a low of Rs 258.42 crore on November 21, 1998. At NSEIL, trading started on Saturdays also and the market was closed on November 25, 1998 due to assembly elections at four states.
 
 

The delivery statistics showed an increase during October month over the previous month and stayed at 19.08 at The Stock Exchange, Mumbai and 15.26 per cent at NSEIL. The delivery ratio at The Stock Exchange, Mumbai has been continuously increasing and has been higher than NSEIL since May 1998. The all India market capitalisation declined by 5.61 per cent during September 1998 over August 1998.
 
 

Ratio Analysis
 
 

Price earning (PE) ratio of Sensex moved up and PE ratio of Natex declined during the month under review. The marginal fall in equity index did not depress PE ratio, which continuously rose from 9.83 as on November 2, 1998 to 11.88 as on November 18, 1998 declined gradually to 11.12 as on November 30, 1998. The PE ratio for BSE 100 rose from 9.15 as on November 2, 1998 to 9.71 on November 18, 1998 and thereafter on steadily fell to 9.09 on November 30, 1998. The price to book ratio of Natex was very low at 1.18 signaling that the medium capitalised stocks were poorly discounted in the market. The Price to book ratio of Sensex was hovering at 2.06. The yield stood at 2.05 for Sensex and 2.83 for Natex.

Chart 4: Volatility of Major Indices
 
 
 
 
 
 
 
 
 
 

Table 13: Volatility of Major Indices (in %age)
 

Month	Sensex	Natex	S&P CNX Nifty	CNX Junior Nifty
Jan-98	4.83	4.74	4.67	4.02
Feb-98	2.62	2.70	2.97	3.98
Mar-98	2.30	2.60	2.02	4.03
Apr-98	2.17	2.36	1.96	6.04
May-98	3.24	2.93	3.09	2.93
June-98	5.26	5.92	5.11	7.72
July-98	3.45	3.25	3.12	3.89
August-98	2.66	2.26	2.57	1.84
Sept-98	3.21	2.91	3.10	2.16
Oct-98	1.93	1.89	1.81	2.54
Nov-98	2.60	2.48	2.58	1.98

 

Table 14 : Sensex Movement During November 1998
 

Date	Open	High	Low	Close	H-L Variation (%)	PE Ratio	PB Ratio	Yield (%)
2/11/98	2820.23	2822.29	2774.11	2811.44	1.74	9.83	1.67	2.32
3/11/98	2815.67	2831.72	2809.01	2812.06	0.81	9.83	1.67	2.32
5/11/98	2817.81	2844.48	2812.52	2842.51	1.14	9.94	1.69	2.30
6/11/98	2849.58	2885.75	2849.58	2884.37	1.27	10.08	1.72	2.27
9/11/98	2955.77	3004.43	2954.57	2983.67	1.69	10.43	1.77	2.19
10/11/98	2992.47	3005.29	2963.58	3004.67	1.41	10.50	1.79	2.17
11/11/98	3017.45	3027.20	2974.61	2976.17	1.77	10.41	1.77	2.20
12/11/98	2973.31	3010.84	2944.06	3009.57	2.27	10.52	1.79	2.17
13-11-98	2976.28	3019.00	2973.49	2976.12	1.53	10.40	1.77	2.20
16-11-98	2953.53	2972.80	2939.67	2945.40	1.13	11.62	2.15	1.96
17-11-98	2947.40	2973.90	2947.40	2968.60	0.90	11.74	2.17	1.94
18-11-98	2975.78	3007.66	2972.75	3003.25	1.17	11.88	2.20	1.91
19-11-98	3010.73	3015.82	2964.87	2964.87	1.72	11.73	2.17	1.94
20-11-98	2966.14	2974.70	2932.85	2941.39	1.43	11.63	2.15	1.96
23-11-98	2929.99	2938.33	2908.16	2919.57	1.04	11.55	2.14	1.97
24-11-98	2925.57	2936.74	2901.44	2903.56	1.22	11.48	2.13	1.98
25-11-98	2900.36	2900.36	2874.17	2881.69	0.91	11.40	2.11	2.00
26-11-98	2874.26	2896.19	2815.97