Market round-up: Appetite picks up for primary market offerings

New project proposals at 50-quarter low, Petroleum consumption slows in December


In the first seven months, firms raised 235% more equity capital than in the corresponding period of FY16.
In the first seven months, firms raised 235% more equity capital than in the corresponding period of FY16.

After a weak start, capital raising through the primary equity market route picked up in FY17. In the first seven months, firms raised 235% more equity capital than in the corresponding period of FY16, says a Citi Research report. This could also be the result of companies intending to deleverage debt or weak credit growth. Note that credit growth in the fortnight ended 23 December was the lowest recorded since 1958. It was industry and infrastructure credit growth that dragged the numbers down. Importantly, there is optimism on the prospects for equity capital fundraising in 2017 on grounds of gradual but sure economic recovery, expected tax reforms and positive data on equity inflows. Also, the performance of equity issuances has been good in the markets, which has raised investor appetite for such instruments.

New project proposals at 50-quarter low

The CMIE capital expenditure data for December 2016 shows deceleration in investment activity, underscoring the hit to economic activity by demonetization. According to Elara Securities (India) Pvt. Ltd, uncertainty and the consequent freeze on economic activity dampened investment sentiments. At 422 projects, new investment proposals during the quarter ended December 2016 fell to their lowest levels since June 2004. The dislocation of economic activity post demonetisation also affected the pace of execution of existing projects. The quarterly project completion rate fell to its lowest level since September 2008, when the global financial crisis was at its peak, points out Elara Securities.

Petroleum consumption slows in December

India’s total petroleum products consumption increased 4.3% in December compared to the same month last year, according to data from Petroleum Planning and Analysis Cell. This is lower than the 11.4% increase seen in November. Still, the December performance is better than September when petroleum product consumption had fallen 0.7% year-on-year. Petrol consumption rose 7.7% in December while diesel consumption, which accounted for almost two-fifths of the total products consumed, increased by just 1%. On the other hand, products such as bitumen, superior kerosene oil and naphtha registered a year-on-year fall. Analysts expect growth to be slower in the coming months thanks to last year’s higher base.

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