Market listings at a six-year high
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Indian companies raised $2.87 billion through initial public offerings (IPOs) in the nine months till September this year. In the previous three years, cumulative fundraising through IPOs stood at $2.7 billion.
The year 2016, then, will be the biggest for IPOs in six years.
This year’s numbers were boosted by the more than $900 million IPO by ICICI Prudential Life Insurance Co. Ltd.
But the funds raised this year will come nowhere close to the $8.5 billion raised in 2010.
The $3.5 billion Coal India Ltd issue and other issuances by government firms resulted in record fund-raising that year.
Business sentiment remains sombre
The Reserve Bank of India’s latest industrial survey shows that business sentiment continued to be sombre in the September quarter.
The Business Expectation Index remained unchanged at 112.9.
The percentage of respondents expecting an increase in production, order book and exports decreased.
Pessimism on cost of finance and cost of raw material deepened for the third quarter, the survey showed.
However, prospects of employment and capacity utilization showed an improvement.
Coking coal prices skyrocket
Hard coking coal prices rose 54% month-on-month in September to $213.4 a tonne.
In fact, prices have more than doubled on a year-on-year basis.
This implies a rise in input cost for Indian steel companies that import coking coal.
Emkay Global Financial Services Ltd believes that the flood in China’s Shanxi province, the change in coal mining policy in China and the supply disruption from Australia have contributed to the rally in prices.
The brokerage firm adds that the sharp jump in coking coal prices is likely to have an impact on third and fourth quarter margins of domestic steel companies, unless of course they can pass on the increase in cost to customers.