Finally the day is upon us when we will know how strong the Ambani name is in the market. Reliance Power, India's biggest IPO to date, received a tremendous response, being oversubscribed by as much as 73x. However, times have changed for the markets since the IPO opened to the public on January 15, 2008. At the time of the IPO opening, experts had expected shares of Reliance Power to list at Rs. 900/- .. Compare it to the current expectations of the IPO listing at Rs. 550 - Rs. 600 and you know something really bad went on during this interim period.
So what caused a sharp decrease in the premium for Reliance Power? I believe the slowdown in the U.S. market led to heightened fears of recession, which in turn caused a severe correction in the Indian markets. This has affected the investors' appetite for IPOs; this is very much evident from the withdrawals of the IPOs for Emaar MGF and Wockhardt Hospitals last week. Both the comapnies saw a poor response to their IPOs and have now decided to raise money from the primary market at a later date when market conditions are more favorable.
The markets too have been trading in the negative for most of last week and everyone's eyes are now on the listing of the IPO for Reliance Power. A blockbuster listing for Reliance Power should see some short-term bullsih momentum enter the market. The Indian markets severely need some positive indicators to stem the outflow of FIIs and generate some liquidity in the primary market. I'm keeping my fingers crossed for no matter how flawed Reliance Power may be as a company, the name RELIANCE can make or break the Indian market! There is just no denying the fact that divided, the Ambani brothers stand taller!!
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