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Capital Markets

India's stock markets: Turbulent markets tilt in investors’ favour

IPL or IPO: banks see new opportunities

IPL cricket games are rarely run of the mill, unlike football matches played in the tournament’s spiritual mentor, the English Premier League. Supposedly richer teams are regularly walloped while smaller teams often beat the odds.

That turbulence and uncertainty has been mirrored this year in India’s stock markets. Mumbai’s leading stock continues to offer windows of opportunity for buyers and sellers: the Sensex, down slightly on the year, jumped 13% in the two months to April 7 before falling back.

That mini-boom was largely driven by a strong corporate earnings season: pharma majors posted a 282% year-on-year rise in profits in the first quarter, with media earnings up 1,721%. And buying opportunities remain: Macquarie highlights Jindal Steel and Power, Gail, HDFC, Larsen & Toubro and Tata Consultancy Services as important underperforming stocks.

Other statistics augur well. Auto sales jumped 26% year on year in the year to March 31, while new private equity investments totalled $2 billion in the first three months, according to Chennai-based Venture Intelligence – the best quarterly figures since 2008. US buyout firm Blackstone alone plans to invest $3 billion in India over the next five years, according to chairman Akhil Gupta.

India’s sale of 3G mobile telecoms licences, which was still in motion as Euromoney went to print, might add up to $10 billion to India’s state coffers.

Then there is India’s IPO season, which often kicks into gear in January or July. This year it is the year of the summer season. Privately run Jindal Power is on track to complete a $1.6 billion stock sale in July, with Coal India’s $3 billion to $4 billion stock sale expected by the end of August.

That sale, by the world’s largest coal miner and set to be India’s largest ever IPO, is being managed by six investment banks: Citi, Deutsche Bank, DSP Merrill Lynch, Enam, Kotak Mahindra, and Morgan Stanley. One veteran investment bank chairman handling the sale says: "Everyone wants a piece of the IPOs and the mobile telecom auctions." But he adds: "Deep down we all want a piece of the IPL action as well – we all chase celebrity a bit, even me, despite my age."

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