'India's primary market growth trajectory is lop-sided'

While a number of large IPOs have successfully raised a lot of capital, a good number of these are outfits from only a few select sectors. Does that leave a gap? What do you think?

Yes, the current trend is clearly in favour of finance and pharma companies, a number of which have lately lined up ambitious fund-raising plans. Their presence stands out particularly because of the near-absence of several critical segments of the economy. It also leads one to reinforce the feeling that large sectors, which were earlier active in the securities market, are now avoiding this route. At any rate, the services industries are significant contributors to the nation's GDP, and cannot be ignored at all. However, the presence of others in the manufacturing space in the list of IPOs would be welcomed too.

Take the last three months. We have had a series of technology-driven, new-generation outfits that have filed their offer documents. Their subscription figures have reflected a significant demand from among the investing fraternity. Of course, the runaway success of Zomato, the food delivery specialists, clearly paved the way for an exception. But there have not been too many of its kind. That means IPO investors are unable to get the kind of diversification they deserve.

Well, there has been great diversity within even limited boundaries, right?

Yes, there has been a modicum of diversification within the confines of BFSI. The latter in particular has seen a range of IPO candidates in recent times. We have seen the arrival of small finance banks, housing finance companies and asset management outfits. The trend is expected to grow stronger in the days ahead. That is because many newer companies in the finance space are ready to garner money from the primary market these days.

If you look at the latest list of offer documents carried by the securities regulator, you will notice how even insurance companies and financial intermediaries are gearing up to tap the market. Select insurance players have listed their stock already. I think this is quite a significant development for investors. Remember, the primary market is eagerly waiting for Life Insurance Corporation. The country's largest insurance company will unlock formidable value – its listing will certainly be a great opportunity for investors.

What role do you expect the primary market to play in the days to come?

The need for IPOs can hardly be over-emphasised in the current context. The primary market, which has gained considerably from reformist policies formed by the government, has greatly empowered investors, both large and small. Allotment processes are very transparent, prompt and cost-efficient. We need to ensure that the small investor is not deprived on this front; an initial allotment of a promising stock can prove greatly beneficial for his portfolio.

I firmly believe that not every ordinary investor sells on the day of listing. The average individual does tend to hold his allotment and perhaps offloads it only later. This has been evident so many times in the past; the trend will in fact turn stronger with every promising case. Yes, a good number of initial allotments will be sold on the first day – this is a strategy that professional investors often adopt to optimise their gains in the quickest possible time. Nevertheless, those who wish to hold are looking forward to their own tack as well. They will delay their gratification, only to emerge as bigger gainers over a stretch of time.

For the so-called old economy, the primary market seems like a no-go zone. Isn't it? What's your take on this?

True, and this exposes the soft underbelly of our system. The manufacturing domain is what may be called a 'noticeable absentee' during the IPO roll-call. I will be happier if the market gets to see a few infrastructure players. Infrastructure development is what we evidently need in a sustained manner. Capital goods and engineering companies are not quite in the fray, it seems. The same applies for commodity players. I agree that the great days for cement, steel and power producers are very nearly over. However, there are other, newer opportunities these days. For instance, clean energy is an emerging area. A lot of corporate and institutional money is already flowing into it, and what is a little dribble today will soon turn into a gush. One is waiting for capital-mobilisation initiatives launched by smart, non-conventional energy companies.

What are the other sectors that can throw up public issues in the days ahead?

The most likely candidates include a wide range of technology-enabled companies. It is time to watch out for emerging businesses – these are the stars that will shine brightly in future. These can range from wearable computers to personal transportation to food logistics. Perhaps agri-supply players will come up stronger in the coming days. Water and water-treatment technology is likely to be a major draw too for investors. It will all depend on how the investing fraternity views the market. The need to generate a decent yield will strengthen even more. I strongly believe that no opportunity will be too inefficient, or too non-competitive. Money will certainly flow into areas that are now on the drawing board; in the process, the primary market will evolve further.