Dalal Street has witnessed record equity issuances in four weeks, with investors making worth over Rs 61,000 crore ($8.1 billion) without hampering the secondary market.

gained, challenging the theory that large equity issuances suck out secondary market liquidity. Historically, large primary issuances weighed on stock prices but market players say this time it is different.

“Stock have done well because of these large issuances not in spite of it,” said an official with a US-based investment banking who didn’t want to be named because he is not authorised to speak to the media.

“Given the overall weak sentiment caused by the covid-19 pandemic, the tremendous response to almost all of these issuances have been a sentiment booster,” he said.

have rallied 13 per cent since May 18, shrugging off grim forecasts about the economy, ratings downgrade and the rise in coronavirus cases.

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Reliance Industries will conclude on Wednesday its mega rights issue, fetching a good response. The block deal in Kotak Mahindra Bank on Tuesday attracted over 120 buyers and last week its qualified institutional placement (QIP) too saw more demand than shares on offer. Bharti Airtel’s Rs 8,400 crore share sale was lapped up by investors even as its stock hovered around all-time highs. Hindustan Unilever, which kicked off the large share-sale issuances, too saw huge buying interest despite being India’s largest-ever block deal at Rs 25,000 crore.

Sources say the investor appetite demonstrated by these issuances is giving confidence to companies to line up their fund raising or stake sales.

Experts, however, said that the share sale window may not be available for all companies.

“There is always liquidity available for good quality paper at attractive valuations. The current share sale is not broad based. It is restricted to a few large companies. While for RIL, it is reducing their debt, for Kotak Mahindra Bank, it is to meet with RBI regulations. While it does bode well to see such fundraising taking place even during these times, I will be surprised if this trend continues or gets broad based,” said Pranav Haldea, managing director, Prime Database.

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Investment bankers said they are in early discussions with several companies to launch However, the focus confidence levels are not very high beyond the blue-chip universe.

“It is only the top companies which are able to do these secondary deals. Companies which are not in the top 100 will still find it challenging to do a rights or QIP. The positive aspect of these transactions is that there is enough liquidity. Investors have enough money or investible surplus, but people are waiting for things to improve. Only the larger companies which are attracting investments,” said Pranjal Srivastava, independent capital professional.

Market players said the broad-marker outperformance seen in May has to extend if the share sale trend has to extend to companies beyond the blue chip universe.


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