Its a refereshing change to see the investors not getting unduly enthused by the stream of IPO’s hitting the markets. Most of highly priced issues are being subscribed by the big Indian as well Foreign institutions for reasons best known to them. Off course this does not in any signify that they are making the right investment decisons. A right investment decision is always about buying a value at the right price. If the markets are bullish and the sentiment is high we have a host of public issues hitting the market as the management of these companies want to cash out on the boom and sell their overpriced shares to the public. Investors refrain show maturity and I am sure this is bad news for the investment bankers. Most of the current IPO’s have resulted in losses for investors on listing. Thank God investors have been spared as they acted wisely.
Now what does this signify for the markets? Investors are avoiding the IPO’s not only because they have become wiser but also because they are fearful. As long as there is fear, the markets cannot go down. Yes we may see some sort of volatility but investors need not worry about investing in good value stocks. Its only when there is greed in the markets that investors need to worry. How do you know that there is greed? Its simple; Stocks go up in musical chairs sequence, every other day you have a new story on a stock, sector performance and fancy do the rounds, there is a mad rush of IPO,s and they get oversubscribed, investors willing to pay any price for stocks, ” This time it is different” the most dangerous arguement to justify the bull run does the rounds. Well none of those things are happening just now so there no need to worry about making investment decisions.
Last year around this time the markets were down to a sensex level below 8000. Was that the right level? There was so much fear that people were just dumping stocks. Moreover due to bankruptcies we had liquidators selling stocks rather than wise investment decision makers. This led to stocks being sold at any prices. Now these abnormal times have become an anchor in the minds of people and they think that the markets have more than doubled and have become dangerous. I personally believe that the markets are not overpriced but fairly priced. Leaving aside the sensex stocks there still exists great investment opportunities.