Mumbai, 22 Nov : .Experts believe that the key secondary market indices in India have been hit hard by a healthy surge in the IPO segment (initial public offerings) in the latter part of 2021. This is the sole and only reason for the slide in secondary markets.
Mega IPOs such as Nykaa and Zomato have attracted large investments from primary to secondary markets.
The primary market, in market parlance is the place where securities are created.These securities are traded on the secondary market.
We are witnessing a correction in India’s market.Some believe the reason for this could be due to the loss of liquidity by the primary market.
The IPO market has been hot the past month, with record-breaking subscriptions and large IPOs.Parth Nyati (Founder of Tradingo) stated that the primary reason we are seeing correction is the relentless selling by FIIs.
Nyati said that the main impact of the busier primary market is seen in the wider market.”We are witnessing consolidation and corrections in many smallcap and midcap counters, while these pockets saw a strong rally last October.”
Tradingo data shows that funds of Rs 2.35 crore were invested in primary markets by HNIs or other non-institutional investors.
HNIs funds play a significant role in a market rally.
“IPOs only pull liquidity out for a short time.Investors will continue to make money by listing as long as they can bring liquidity from other sources.”The secondary market flows are not affected by liquidity tied up in IPOs,” stated Deepak Jasani of HDFC Securities, Head of Retail Research.
Likhita Cherpa Senior Research Analyst at CapitalVia Global Research says that the success or failure of public offerings will have a significant impact on liquidity in the secondary market.
The liquidity of secondary securities is measured by news flows, mainly negative.
Anuj Gupta is Vice President of IIFL Securities.He stated: “The depository information for this month indicates that net FPI purchasing was over Rs 14,000 crore (until November 18,).However, the net buy number does not include Rs 23169 crore primary market investments.FPIs sold stocks in November worth more than Rs 9000 crore on the secondary market.
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