Following Russia's invasion of Ukraine and market sentiment taking a hit on rising crude and commodity prices, over Rs 77,000 crore worth of IPOs from 51 companies is unsure of entering the market. Bankers to the mega IPO by LIC are pushing to government to delay the share sale.
India had a stellar year in terms of initial public offerings (IPOs) last year, but this year companies have stalled their plans for new share sales with markets having been routed following Russia’s invasion of Ukraine. As the market situation remains pessimistic amid the ongoing war, over Rs 77,000 crore will not be raised by as many as 51 companies, according to data from capital markets researcher Prime Database.
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Fifty one companies had filed their papers with market regulator Securities and Exchange Board of India, and had received the necessary approvals for their listing debut. But these companies have now decided to postpone their IPOs.
Apart from these 51 companies, 43 have filed their papers with SEBI but have not yet received the necessary clearances for going ahead with their IPOs. The Life Insurance Corporation of India's mega IPO was cleared earlier today by SEBI, though the bankers advising the issue have pushed the government to delay the listing, reported Reuters citing sources.
“Historically, activity in the primary market is seen only when the secondary market is buoyant. While markets have been choppy since October, the last couple of months have seen exceptional amounts of volatility as a result of which just three IPOs have been launched in 2022," said Pranav Haldea, Managing Director at Prime Database.
Russia’s invasion of Ukraine has sent global markets sliding, while crude prices at $125 a barrel are hitting the roof. Commodity prices too, are raising fears of rampant input cost inflation. The rupee has also weakened considerably, falling by nearly 2.6 percent over the past month.
Investors in India are particularly concerned about the country’s dependence on imported crude and natural gas, both of which are heavily exported by Russia, prices of which have risen considerably in the past few weeks due to sanctions on Russia.
The unstable geopolitical situation will continue to drive investors away from risky bets like equities, commodities and more. With the invasion continuing in full force and risks of further escalation increasing every day it seems untenable for many IPOs to make their debut on the stock exchanges in the current climate.
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(Edited by : Thomas Abraham)