PROJECT REPORT

Measures for Improving Retail

Investors’ Confidence in Indian
Primary Market

RELIGARE SECURITIES LTD.

Submitted to:- Submitted by:-

DR. Y.P. SINGH TARUN PRAKASH SINGH
Faculty P.G.D.B.A. II
IISE Enroll. No. - 878
Lucknow Session: 2006-2008

INTERNATIONAL INSTITUTE FOR

SPECIAL EDUCATION
 ACKNOWLEDGEMENT

“When walking down the path of life, remember it’s true that every man
must feel the thorns that grow along the way and every soul will stumble
for every man is weak and the road of life is uncertain and its prospects
often bleak. But always give a helping hand to help the soul beside you
walk across each weary mile.”

I hereby express my profound gratitude to all those respected people who

supported me in the completion of this project.

I would like to thank my company guides, Mr. Sameer Kaila (Branch

Head, Religare, Janakpuri branch), Mr. Chander Narula (RM,
Religare, Janakpuri Branch) and all the staff members of Religare
(Janakpuri Branch) for their cooperation and support.

I would also like to extend my thanks to my project guide, Mr. Anurag

Singh (Faculty, DSPSR) for his constant support and valuable suggestions
without which this project would not been successfully completed.

Lastly, no words are enough to express my heartiest gratitude to my

parents whose blessings are inspiration in the foundation of my work.

I am really thankful to all of them for their immense support and valuable
guidance in the completion of this project.

(TARUN PRAKASH SINGH)

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 TABLE OF CONTENTS

S No. Topic Page Nos.

1 Introduction Of The Company
I About Company 4-5
II Group Company 6-8
III Promoter Group – Business Interests 9
IV Business Line 10
V Brand Identity 11-12
2 An Overview Of The Capital Market
I Capital Market 13
II Primary Market 13-14
III Methods Of Issuing Securities In The 15-17
Primary Market
IV Eligibility Norms For Making Issues 18-19
V SEBI’s Role In An Issue 20-21
VI Retail Investor Defined 22
VII Promoter Defined 22-23
VIII Pricing And Allotment Of Issue 24-26
IX IPO As An Investment Avenue For Retail 27-28
Investors
X Learn Before You Leap Into The IPO Mart 29-32
3 Project Report
I Introduction 33-34
II Need Of The Study 35
III Results Of Literature Survey 36
IV Objective 37
V Proposed Methodology 38
VI Data Analysis & Interpretation 39-50
VII Limitations 51
VIII The Conclusion 52-54
IX Recommendations 55-56
4 Bibliography 59
5 Questionnaire 60-61

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 INTRODUCTION OF THE COMPANY

ABOUT COMPANY

Religare is driven by ethical and dynamic process for wealth creation.

Based on this, the company started its endeavor in the financial market.

Religare Enterprises Limited (A Ranbaxy Promoter Group Company)

through Religare Securities Limited, Religare Finvest Limited,
Religare Comdex Limited and Religare Insurance Advisory Services
Limited provides integrated financial solutions to its corporate, retail and
wealth management clients. Today, we provide various financial services
which include Investment Banking, Corporate Finance, Portfolio
Management Services, Equity & Commodity Broking, Insurance and
Mutual Funds. Plus, there’s a lot more to come your way.

Religare is proud of being a truly professional financial service provider

managed by a highly skilled team, who have proven track record in their
respective domains. Religare operations are managed by more than 1500
highly skilled professionals who subscribe to Religare philosophy and are
spread across its country wide branches.

Today, we have a growing network of 150 branches and more than 300
business partners spread across 180 cities in India and a fully operational
international office at London. However, our target is to have 350 branches
and 1000 business partners in 300 cities of India and more than 7
International offices by the end of 2006.

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Unlike a traditional broking firm, Religare group works on the philosophy
of partnering for wealth creation. We not only execute trades for our clients
but also provide them critical and timely investment advice. The growing
list of financial institutions with which Religare is empanelled as an
approved broker is a reflection of the high level service standard
maintained by the company.

VISION

To build Religare as a globally trusted brand in the financial services

domain and present it as the ‘Investment Gateway of India’.

MISSION

Providing financial care driven by the core values of diligence and

transparency.

BRAND ESSENCE

Religare is driven by ethical and dynamic processes for wealth creation.

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 GROUP COMPANIES

Religare Enterprises Limited group comprises of Religare Securities

Limited, Religare Comdex Limited, Religare Finvest Limited and
Religare Insurance Advisory Services Limited which deal in equity,
commodity and financial services business.

Religare Securities Limited

Member of National Stock Exchange of India (NSE) and Bombay Stock
Exchange of India (BSE). Depository Participant with National Securities
Depository Limited (NSDL) and Central Depository Services (I) Limited
(CDSL), A SEBI approved Portfolio Manager.
RSL serves a platform to all segments of investors to avail the
opportunities offered by investing in Indian equities either on their own or
through managed funds in Portfolio Management

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Religare Comdex Limited
Member of National Commodity Derivative Exchange (NCDEX) and
Multi Commodity Exchange (MCX).
RCL provides platform to both agro and non-agro commodity traders to
derive the actual price of the commodity and also to trade and hedge
actively in the growing commodity trading market in India.

Religare Finvest Limited

A Non Banking Finance Company (NBFC) is aggressively making a name
in the financial services arena in India. In a fast paced, constantly changing
dynamic business environment, RFL has delivered the most competitive
products and services.
RFL is primarily engaged in the business of providing finance against
securities in the secondary market. It also provides finance for application
in Initial Public Offers to non-retail clients in the primary market.
RFL is also planning to initiate personal loan portfolio as fund based
activity and mutual fund distribution as fee based activities.

Religare Insurance Advisory Services Ltd.

Religare has been taking care of financial services for long but there was a
missing link. Financial planning is incomplete without protective measure
i.e. structured products to take care of event of things that may go wrong.

Consequently, Religare is soon coming up with Religare Insurance

Advisory Services Limited. As composite insurance broker, we would deal
in both insurance and reinsurance, providing our clients risk transfer
solutions on life and non-life sides.

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This service will take benefit of Religare’s vast business empire spread
throughout the country -- providing our valued clients insurance services
across India. We aim to have a wide reach with our services – literally!
That’s why we are catering the insurance requirements of both retail and
corporate segments with products of all the insurance companies on life
and non-life side.

Still, there is more in store. We also cater individuals with a complete suite
of insurance solutions, both life and general to mitigate risks to life and
assets through our existing network of over 150 branches – expected to
reach 250 by the end of this year!
For corporate clients, we will be offering value based customised solutions
to cover all risks which their business is exposed to. Our clients will be
supported by an operations team equipped with the best of technology
support.
RIAL aims to provide neutral, transparent and professional risk transfer
advice to become the first choice of India.

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 PROMOTER GROUP – BUSINESS INTERESTS

Pharma

Healthcar
Diagnostics
e
Group Business Interests

Financial Services

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 BUSINESS LINES

Equity &
Derivative
Private Institutional
Equity Distribution

Investment Depository
Banking & Services
Corporate
Finance

Wealth Commodity
Management Services
Services International
Equity &
Commodity

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 BRAND IDENTITY

The Name

Religare is a Latin word that translates as 'to bind together'. This name has
been chosen to reflect the integrated nature of the financial services the
company offers. The name is intended to unite and bring together the
phenomenon of money and wealth to co-exist and serve the interest of
individuals and institutions, alike.

The Symbol

The Religare name is paired with the symbol of a four-leaf clover. The
four-leaf clover is used to define the rare quality of good fortune that is the
aim of every financial plan. It has traditionally been considered good
fortune to find a single four leaf clover considering that statistically one
may need to search through over 10,000 three-leaf clovers to even find one
four leaf clover.

Each leaf of the four-leaf clover has a special meaning in the sphere of
Religare.

The first leaf of the clover represents Hope. The aspirations to

succeed. The dream of becoming. Of new possibilities. It is the beginning
of every step and the foundations on which a person reaches for the stars.

The second leaf of the clover represents Trust. The ability to place
ones own faith in another. To have a relationship as partners in a team. To
accomplish a given goal with the balance that brings satisfaction to all not
in the binding but in the bond that is built.

The third leaf of the clover represents Care. The secret ingredient
that is the cement in every relationship. The truth of feeling that underlines
sincerity and the triumph of diligence in every aspect. From it springs true
warmth of service and the ability to adapt to evolving environments with
consideration to all.

The fourth and final leaf of the clover represents Good Fortune.
Signifying that rare ability to meld opportunity and planning with

11
circumstance to generate those often looked for remunerative moments of
success.

Hope, Trust, Care, Good fortune. All elements perfectly combine in

the emblematic and rare, four-leaf clover to visually symbolize the values
that bind together and form the core of the Religare vision.

Accent usage

The diacritical tilde mark ( ˜ ) over the letter A in the Religare typeface
indicates a palatal emphasis sound of the letter A.

Pronunciation

reli•ga•re (rel'i-gâir)

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 AN OVERVIEW OF THE CAPITAL MARKET

CAPITAL MARKET

Capital Market is the backbone of any country’s economy. It facilitates

conversion of savings to investments. Capital market can be classified as
primary and secondary market. The fresh issue of securities takes place in
primary market and trading among investors takes place in secondary
market. Primary market is also known as new issues market. Equity
investors first enter capital market through investment in primary market.
These new securities issued in the primary market are traded in the
secondary market. The secondary market enables participants who hold
securities to adjust their holdings in response to changes in their
assessment of risks and returns.

PRIMARY MARKET

The primary is that part of the capital markets that deals with the issuance
of new securities. Companies, governments or public sector institutions
can obtain funding through the sale of a new stock issue. This is typically
done through a syndicate of securities dealers. The process of selling new
issues to investors is called underwriting. In the case of a new stock issue,
this sale is an initial public offering (IPO).

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Features of Primary Market are:-

1. This is the market for new long term capital. The primary market is the
market where the securities are sold for the first time. Therefore it is also
called New Issue Market (NIM).

2. In a primary issue, the securities are issued by the company directly to

investors.

3. The company receives the money and issue new security certificates to
the investors.

4. Primary issues are used by companies for the purpose of setting up new
business or for expanding or modernizing the existing business.

5. The primary market performs the crucial function of facilitating capital

formation in the economy.

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 METHODS OF ISSUING SECURITIES IN THE PRIMARY
MARKET

Primarily, issues can be classified as a Public, Rights (for existing

Companies) or Preferential Issue (also known as private placements).
While public and rights issues involve a detailed procedure, private
placements or preferential issues are relatively simpler.

Public issues can be further classified into Initial Public Offerings (IPO)
and Further Public Offerings (FPO). In a public offering, the issuer makes
an offer for new investors to enter its shareholding family. It then makes
detailed disclosures as per the guidelines in its offer document and offers it
for subscription.

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Initial Public Offering (IPO) is when an unlisted company makes either a
fresh issue of securities or an offer of sale of its existing securities or both
for the first time to the public. This paves way for listing and trading of the
issuer’s securities.

A Further Public Offering (FPO) is when an already listed company

makes either a fresh issue of securities to the public or an offer for sale to
the public, through an offer document. An offer for sale in such scenario is
allowed only if it is made to satisfy listing or continuous listing
obligations.

Rights Issue (RI) is when a listed company which proposes to issue fresh
securities to its existing shareholders as on a record date. The rights are
normally offered in a particular ratio to the number of securities held prior
to the issue. This route is best suited for companies who would like to raise
capital without diluting stake of its existing shareholders unless they do not
intend to subscribe to their entitlements.

A Private Placement is an issue of shares or of convertible securities by

listed companies to a select group of persons under Section 81 of the
Companies Act, 1956 which is neither a rights issue nor a public issue.
This is a faster way for a company to raise equity capital. A private
placement of shares or of convertible securities by a listed company is
generally known by name of preferential allotment. A listed company
going for preferential allotment has to comply with the requirements
contained in Chapter XIII of SEBI (DIP) Guidelines pertaining to
preferential allotment in SEBI (DIP) guidelines which interalia include

16
pricing, disclosures in notice etc, in addition to the requirements specified
in the Companies Act.

A Qualified Institutions Placement is a private placement of equity

shares or securities convertible in to equity shares by a listed company to
Qualified Institutions Buyers only in terms of provisions of Chapter XIIIA
of SEBI (DIP) guidelines. The Chapter contains provisions relating to
pricing, disclosures, currency of instruments etc.

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 ELIGIBILITY NORMS FOR MAKING ISSUES

SEBI has laid down eligibility norms for entities accessing the primary
market through public issues. There is no eligibility norm for a listed
company making a rights issue, as it is an offer made to the existing
shareholders who are expected to know their company. There are no
eligibility norms for a listed company making a preferential issue.
However for Qualified Institutions’ placement (QIP), only those companies
whose shares are listed in NSE or BSE and those who are having a
minimum public float as required in terms of the Listing agreement, are
eligible. The main entry norms for companies making a public issue (IPO
or FPO) are summarized as:

ENTRY NORM I: The Company shall meet the following requirements:

(a) Net Tangible Assets of at least Rs. 3 crores for 3 full years.
(b) Distributable profits in at least three years.
(c) Net worth of at least Rs. 1 crore in three years.
(d) If change in name, at least 50% revenue for preceding 1 year should be
from the new activity.
(e) The issue size does not exceed 5 times the pre- issue net worth.

To provide sufficient flexibility and also to ensure that genuine companies

do not suffer on account of rigidity of the parameters, SEBI has provided
two other alternative routes to company not satisfying any of the above
conditions, for accessing the primary Market, as under:

ENTRY NORM II:

(a) Issue shall be through book building route, with at least 50% to be
mandatory allotted to the Qualified Institutional Buyers (QIBs).

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(b) The minimum post-issue face value capital shall be Rs. 10 crore or
there shall be a compulsory market-making for at least 2 years.

OR

ENTRY NORM III:

(a) The “project” is appraised and participated to the extent of 15% by
FIs/Scheduled Commercial Banks of which at least 10% comes from the
appraiser(s).
(b) The minimum post-issue face value capital shall be Rs. 10 crore or
there shall be a compulsory market-making for at least 2 years.

In addition to satisfying the aforesaid eligibility norms, the company shall

also satisfy the criteria of having at least 1000 prospective allotees in its
issue

CATEGORY OF ENTITIES WHICH ARE EXEMPETED FROM

THE AFORESAID ELIGIBILITY NORMS

SEBI (DIP) guidelines have provided certain exemptions from the

eligibility norms. The following are eligible for exemption from entry
norms:
(a) Private Sector Banks
(b) Public sector banks
(c) An infrastructure company whose project has been appraised by a PFI
or IDFC or IL&FS or a bank which was earlier a PFI and not less than 5%
of the project cost is financed by any of these institutions.
(d) Rights issue by a listed company.

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 SEBI’s ROLE IN AN ISSUE

Any company making a public issue or a listed company making a rights

issue of value of more than Rs. 50 lakhs is required to file a draft offer
document with SEBI for its observations. The validity period of SEBI’s
observation letter is three months only i.e. the company has to open its
issue within three months period.
There is no requirement of filing any offer document / notice to SEBI in
case of preferential allotment and QIP. In QIP, Merchant Banker handling
the issue has to file copy of placement document with SEBI post allotment
for record purpose.

SEBI does not recommend any issue nor does take any responsibility
either for the financial soundness of any scheme or the project for which
the issue is proposed to be made or for the correctness of the statements
made or opinions expressed in the offer document.

It is to be distinctly understood that submission of offer document to SEBI

should not in any way be deemed or construed that the same has been
cleared or approved by SEBI. The Lead manager certifies that the
disclosures made in the offer document are generally adequate and are in
conformity with SEBI guidelines for disclosures and investor protection in
force for the time being. This requirement is to facilitate investors to take
an informed decision for making investment in the proposed issue.

The investors should make an informed decision purely by themselves

based on the contents disclosed in the offer documents. SEBI does not
associate itself with any issue/issuer and should in no way be construed as
a guarantee for the funds that the investor proposes to invest through the
issue. However, the investors are generally advised to study all the material

20
facts pertaining to the issue including the risk factors before considering
any investment. They are strongly warned against any ‘tips’ or news
through unofficial means.

“DIP” GUIDELINES

The primary issuances are governed by SEBI in terms of SEBI

(Disclosures and Investor protection) guidelines. SEBI framed its DIP
guidelines in 1992. Many amendments have been carried out in the same
in line with the market dynamics and requirements. In 2000, SEBI issued
“Securities and Exchange Board of India (Disclosure and Investor
Protection) Guidelines, 2000” which is compilation of all circulars
organized in chapter forms. These guidelines and amendments thereon are
issued by SEBI India under section 11 of the Securities and Exchange
Board of India Act, 1992. SEBI (Disclosure and investor protection)
guidelines 2000 are in short called DIP guidelines. It provides a
comprehensive framework for issuances buy the companies.

SEBI ENSURE COMPLIANCE WITH DIP

The Merchant Banker are the specialized intermediaries who are required
to do due diligence and ensure that all the requirements of DIP are
complied with while submitting the draft offer document to SEBI. Any non
compliance on their part, attract penal action from SEBI, in terms of SEBI
(Merchant Bankers) Regulations. The draft offer document filed by
Merchant Banker is also placed on the website for public comments.
Officials of SEBI at various levels examine the compliance with DIP
guidelines and ensure that all necessary material information is disclosed
in the draft offer documents.

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 RETAIL INVESTOR DEFINED

Individual investors who buy and sell securities for their personal account
and not for another company or organization. They are also known as
“Individual investors" or "Small investors”.
‘Retail individual investor’ means an investor who applies or bids for
securities of or for a value of not more than Rs. 1,00,000. He can bid in a
book-built issue for a value not more than Rs. 1,00,000.

PROMOTER DEFINED

The promoter has been defined as a person or persons who are in over-all
control of the company, who are instrumental in the formulation of a plan
or programme pursuant to which the securities are offered to the public and
those named in the prospectus as promoters(s). It may be noted that a
director / officer of the issuer company or person, if they are acting as such
merely in their professional capacity are not be included in the definition
of a promoter.

'Promoter Group' includes the promoter, an immediate relative of the

promoter (i.e. any spouse of that person, or any parent, brother, sister or
child of the person or of the spouse). In case promoter is a company, a
subsidiary or holding company of that company; any company in which
the promoter holds 10% or more of the equity capital or which holds 10%
or more of the equity capital of the Promoter; any company in which a
group of individuals or companies or combinations thereof who holds 20%
or more of the equity capital in that company also holds 20% or more of
the equity capital of the issuer company. In case the promoter is an

22
individual, any company in which 10% or more of the share capital is held
by the promoter or an immediate relative of the promoter' or a firm or HUF
in which the 'Promoter' or any one or more of his immediate relative is a
member; any company in which a company specified in (i) above, holds
10% or more, of the share capital; any HUF or firm in which the aggregate
share of the promoter and his immediate relatives is equal to or more than
10% of the total, and all persons whose shareholding is aggregated for the
purpose of disclosing in the prospectus "shareholding of the promoter
group".

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 PRICING AND ALLOTMENT OF ISSUE

Indian primary market ushered in an era of free pricing in 1992. Following

this, the guidelines have provided that the issuer in consultation with
Merchant Banker shall decide the price. There is no price formula
stipulated by SEBI. SEBI does not play any role in price fixation. The
company and merchant banker are however required to give full
disclosures of the parameters which they had considered while deciding
the issue price. There are two types of issues one where company and LM
fix a price (called fixed price) and other, where the company and LM
stipulate a floor price or a price band and leave it to market forces to
determine the final price (price discovery through book building process).

FIXED PRICE OFFERS

An issuer company is allowed to freely price the issue. The basis of issue
price is disclosed in the offer document where the issuer discloses in detail
about the qualitative and quantitative factors justifying the issue price. The
Issuer company can mention a price band of 20% (cap in the price band
should not be more than 20% of the floor price) in the Draft offer
documents filed with SEBI and actual price can be determined at a later
date before filing of the final offer document with SEBI/ROCs.

PRICE DISCOVERY THROUGH BOOK BUILDING PROCESS

“Book Building” means a process undertaken by which a demand for the

securities proposed to be issued by a body corporate is elicited and built up
and the price for the securities is assessed on the basis of the bids obtained

24
for the quantum of securities offered for subscription by the issuer. This
method provides an opportunity to the market to discover price for
securities.

Book building is a process of price discovery. Hence, the Red Herring

prospectus does not contain a price. Instead, the red herring prospectus
contains either the floor price of the securities offered through it or a price
band along with the range within which the bids can move. The applicants
bid for the shares quoting the price and the quantity that they would like to
bid at. Only the retail investors have the option of bidding at ‘cut-off’.
After the bidding process is complete, the ‘cut-off’ price is arrived at on
the lines of Dutch auction. The basis of Allotment is then finalized and
letters allotment/refund is undertaken. The final prospectus with all the
details including the final issue price and the issue size is filed with ROC,
thus completing the issue process.

PRICE BAND

The red herring prospectus may contain either the floor price for the
securities or a price band within which the investors can bid. The spread
between the floor and the cap of the price band shall not be more than
20%. In other words, it means that the cap should not be more than 120%
of the floor price. The price band can have a revision and such a revision in
the price band shall be widely disseminated by informing the stock
exchanges, by issuing press release and also indicating the change on the
relevant website and the terminals of the syndicate members. In case the
price band is revised, the bidding period shall be extended for a further

25
period of three days, subject to the total bidding period not exceeding
thirteen days.

It may be understood that the regulatory mechanism does not play a role in
setting the price for issues. It is up to the company to decide on the price or
the price band, in consultation with Merchant Bankers.
The basis of issue price is disclosed in the offer document. The issuer is
required to disclose in detail about the qualitative and quantitative factors
justifying the issue price.

ALLOTMENT OF ISSUE

All allotments are done fair and there cannot be any discretion in the
allotment process. Prior to the SEBI Circular on DIP Guidelines dated
September 19, 2005, the allotment to the Qualified Institutional Buyers
(QIBs) was on a discretionary basis. This however has been amended and
all allottees are allotted shares on a proportionate basis within their
respective categories.

In a book built issue allocation to Retail Individual Investors (RIIs), Non

Institutional Investors (NIIs) and Qualified Institutional Buyers (QIBs) is
in the ratio of 35:15:50 respectively.
In case the book built issues are made pursuant to the requirement of
mandatory allocation of 60% to QIBs in terms of Rule 19(2)(b) of SCRR,
the respective figures are 30% for RIIs and 10% for NIIs. This is a
transitory provision pending harmonization of the QIB allocation in terms
of the aforesaid Rule with that specified in the guidelines.

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 IPO AS AN INVESTMENT AVENUE FOR RETAIL INVESTORS

Investing in IPO is an easy, low-risk way to make an average of 2-3%

return in 20-30 days, assuming market does not fall in between allotment
and listing. A 2-3% return can seem very low on a nominal basis, but when
you calculate the annualised return it becomes very attractive. Investors
can make an annualised return of about 30%, on an average, easily by
investing in quality IPO’s. In fact Investors have made an annualised return
of over 100% in a few IPO’s. IPO as an investment class offers good
returns and no other similar risk reward structure will give as much
returns.

Investing in the issues of primary market has its own benefit and
drawbacks. Some of the key benefits are:
* It is safer to invest in the primary markets than in the secondary markets
as the scope for manipulation of price is smaller.
* The investor does not have to pay any kind of brokerage or transaction
fees or any tax such as service tax, stamp duty and STT.
* No need to time the market as all investors will get the shares at the same
price.

Some of the major drawbacks are as following:

* In case of over subscription, the shares are allotted in proportionate basis.
Thus, small investors hardly get any allotment in such a case.
* Money is locked for a long time and the shares are allotted after a few
days where as in case of purchase from the secondary market the shares
are credited within three working days.

27
There are several strategies, methods or tools in the assessment of IPO’s.
There is no best strategy and investment in an IPO should be viewed on a
case-to-case basis.

The popular investment strategies are as follow:-

1. Buy and Hold: This is the most conservative and most fish patient way
to trade stocks. But it may also be the most efficient. Investors simply
choose quality IPO’s or blue chip stocks and hold them for many years.

Long-term investors don’t worry about market fluctuations because they

figure that their stocks will have time to recover from a down market. The
investor believes that in the long run the company will outperform the
market as the fundamentals of the company is sound. He also saves on
broker commissions because he isn’t paying for frequent transactions.
Drawback of this strategy is that choosing the right time to sell investments
can be tricky. One can counter this problem somewhat by knowing in
advance when he will need the money.

2. Short-term Trading: This method is a favorite for people looking to

make a quick buck. Basically, it involves applying for the IPO and then
swiftly selling stocks on the listing day to capitalize on volatile market.
Day traders can win or lose a fortune in a single day. The problem with
short-term trading is that over-all investor is bound to lose money in the
long run.

Many investors new to the stock-picking scene believe that there is some
infallible strategy that, once followed, will guarantee success. But it is not
so and there is no foolproof system for picking stocks!

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 LEARN BEFORE YOU LEAP INTO THE IPO MART

An investor needs to be careful while investing in IPOs. In the world of

IPO investing, the most critical aspect is to read up as much as you can
about the issue. Do not treat the abridged prospectus as just an application
form. However badly designed and difficult it may be to read, the
prospectus is still a treasure-trove of information.

An investor who is considering a leap into the IPO market must go through
the following list of dos and don'ts.

Check out...

1. The promoters' background: This is by far the most important

element. However good the product, technology or market, it is the
promoters who run the company. Find out about their track record, their
other interests, performance of other group companies and the relationship
between these companies.

2. The company's balance sheet: If you want to be an investor, it's time to

start reading and understanding a balance sheet. Pay attention to the top-
line and the bottom-line, major variances; but most importantly, consider
carefully the extraordinary items and notes to accounts. It's quite possible
for a company to derive its revenues not from its main business, but from
smart accounting entries.

29
3. Risk factors: Though risk factors are not very clearly spelt out, a careful
reading would still give enough information of the downsides. Try to do an
impact analysis of the critical risk factors.

4. Shareholding pattern: It is important to know who the major

shareholders of the company are and what their shareholding pattern will
be after the issue. A huge promoter stake is not too desirable. If a company
has institutional investors as its shareholders, it means that a lot of due
diligence has already been done on the company. Try to find out at what
prices these pre-issue allotments have been made, and to whom and when.

5. Value, not price or par: An offering at the face value of Rs. 10 is not
necessarily cheap. The "par value" system often gives you the impression
that no premium is being charged. But it's possible that such issues may
not even be worth the par value; in such cases, the par pricing could
actually mean an inherent premium. Also, beware of another malaise: of
some companies who offer shares by reducing par value to make their
offer prices look more attractive.

7. The issue objective and corporate actions: You certainly couldn't have
forgotten the huge incidence of "vanishing" companies which, in fact, were
cases of "vanishing" funds. It is important to find what the company plans
to do with the issue funds.
Is the issue for general corporate purposes, or to finance a new project or
for an expansion/diversification project? Or is it for retiring debt? Look
carefully at all corporate actions like dividends, bonus issues and
mergers/acquisitions.

30
8. Compliance record and litigations: Find out whether group companies
have been diligent in filing their returns to various bodies such as the stock
exchanges and registrar of companies. The prospectus will disclose all
major litigation cases filed against the company's directors and promoters,
as well as against group companies. Avoid companies that are deeply
mired in litigations.

9. Dues and disciplinary action: Check for outstanding dues and defaults
to lenders and depositors. Indian promoters do have a reputation for
defaulting, many times "willfully". It is also important to see if there have
been any disciplinary actions taken by SEBI, stock exchanges and other
regulatory body against the company or its directors/promoters.

10. Underwriters and investment bankers: Underwriters add to the

issue's strength. An underwritten issue today does not denote weakness
requiring an underwriting support, it shows that there are intermediaries
who after assessing the risks have decided to back the issue. Also, before
investing in an issue, look at the names of its investment bankers and
check out their past track record.

Don't be guided by…

1. Market prospects: Any prospectus will describe the market potential in

superlative terms. Do not be misled by those numbers mentioned in the
offer document.

2. The brands or corporate image: First of all, remember that you are
investing in the company, not in a brand. A company may have a hugely

31
popular brand, but may be bleeding financially. Moreover, a high-flying
company may still be a risky or losing proposition if its issue has been
aggressively priced.

3. Hype or loose talk: In buoyant times, the capital market is frequently

the subject of discussion at parties. Do not be influenced by this. Besides,
there may also be tonnes of uninformed advice that will come to you from
friends and relatives.

4. Greed: Do not bet your last penny on new issues. Do not borrow money
or sell other assets or worse, divert your business funds into new issues.

5. SEBI approval: The approval of an IPO by the markets regulator is not

a certificate of good quality. Most guidelines are very straight-jacketed. It's
all too easy for companies to comply with these guidelines, at least on
paper, if not in spirit.

An investor must remember that equity, by its very nature, is a risk-laden

instrument: it is because of this very fact it holds the promise of higher
rewards. Is should not be misconstrued as "guaranteed return products".
You can only minimise your risks, and that can be done by sticking to good
companies.

32
 PROJECT REPORT

INTRODUCTION

Capital market is the market for raising of financial assets by the business
enterprises, firms, government, semi-government bodies, PSU’s and other
organisations, that have long maturity. It is a market for the lending and
borrowing of long term funds. It is mainly concerned with the mobilization
of national surplus funds and their investment in long term securities by
the issue and distribution of shares and by subsequent trade in them.

Public, intermediaries and companies constitute primary market. Fresh

issue of shares by companies either directly or through intermediaries takes
place in primary market. Offer of securities in primary market can take the
form of public issue, rights issue or private placement. A public issue,
which involves sale of securities to members of the public, is the most
important mode of raising long term funds. Rights issue is the method of
raising capital from existing shareholders by offering additional securities
to them on a pre-emptive basis. Private placement is a way of selling
securities privately to a small group of investors. In secondary markets
trading of existing securities take place.

Public, brokers, and financial institutions constitute the secondary market

both domestic and foreign and corporate houses. The secondary market in
India, where outstanding securities are traded, consists of the stock
exchange recognised by the Government. In stock exchanges trading takes
place between various investors. Stock exchange is one of the most
important institution in the Capital market, which includes term lending

33
institutions, banks, investors, companies and intermediaries who are
engaged in providing long term capital, whether share capital or debt
capital.

Since, Independence and particularly after 1951, the Indian Capital market
has been broadening significantly and the volume of saving and investment
has shown steady improvement. A very important indicator of the growth
of the Capital market is the growth of joint stock companies or corporate
enterprises. The rate of growth of investment has been phenomenal in
recent years. As a result of freeing the issue as well as pricing of securities,
subject to the regulations of SEBI, markets experienced tremendous
growth during the current decade. But this growth could not be sustained
and numbers of companies have become illiquid over period of time for
variety of reasons. As a consequence, investors have lost confidence in the
capital market and are wary of investing in equity shares.

34
 NEED OF THE STUDY

Investor’s confidence is of great importance for the stability of capital

market in particular and Indian economy in general. A major proportion of
investment in primary & secondary markets come form small investors in
India. Whereas in developed countries institutional investors constitute a
major proportion of investment. Small investors approach primary markets
for both regular income and capital gains. When they invest in companies
either at par or at a reasonable premium they will receive dividends and
appreciation in market price and thus their twin objectives are satisfied.

Since liberalisation, small investors actively participated in the primary

market. This allowed for exponential growth in the primary markets as
well as secondary markets. But this growth could not be sustained due to
lack of quality in the securities offered. In order to have a sustainable
growth in the economy and capital formation an active primary market is a
must. Thus, reasons for lack of confidence and measures for revival of
small investor confidence is of importance not only from investors’ point
of view but also from economy point of view. This study makes an effort
to answer the issues relating to this topic. The project has been undertaken
to study factors affecting investor confidences and ways of improving
investors’ confidence in primary market.

35
 RESULTS OF LITERATURE SURVEY

From the reports given by various newspaper articles, magazines and

internet journals, a number of factors can be identified as the causes for
lack of investor confidence in Indian primary markets. Some of the factors
identified are as follows:-

A) Strategic alliances used as a marketing tool for the investors before the
issue which did not continue after listing.

B) Companies used the names of reputed groups and institutional investors

as a marketing tool, which later on served their connections with the
companies after lock-in period.

C) Heavy premium charged on the issues but after listing these issued were
being quoted at a price far discounted.

D) Actual performance far below the projected figures.

E) Delay in commercial production due to number of factors.

F) Cost over run of projects due to implementation delays

G) Buy back arrangements with equipment suppliers and foreign partners

were not satisfied.

H) Companies investing in financial assets rather than fixed assets as there

was no control over the deployment of funds by the companies.

I) Indiscriminate investments by investors with a short-term attitude

without understanding the risk involved.

36
 OBJECTIVE OF THE PROJECT

The main objective behind this study is to find out various ways of
improving the current primary market situation. What needs to be done to
make investors aware of the risks in investment, how the investments in
primary market issues takes place and what investors feel about improving
the quality of primary market issues are some of the sub objectives the
research proposes to discover.

37
 PROPOSED METHODOLOGY

Sample Size : 100 respondents (common investors).

Sampling Method : Convenience Sampling.
Geographical Area : The study will be confined to the city, New
Delhi.
Data Collection : Secondary data collected from journals,
magazines, newspapers, internet and
reference books and primary data will be
collected through questionnaires.

A total of about 100 questionnaires were filled up by the investors located

in the city using brokers, investor associations, managers of companies,
professionals, Internet groups and other contacts. The responses were
received from those investors who were willing to spend their time and
wished contribute to research willingly only. So it constitutes a
convenience sample.

The questionnaire has three parts. In the first part, the investor preferences
for the decisions in primary market issues were graded using Likert scale.
In the second part the factors affecting the primary equity market were
studied using ranks. The third part consisted of an open-ended question
relating to measures to improve primary market situation.

38
 DATA ANALYSIS & INTERPRETATION

INVESTOR DECISIONS IN PRIMARY MARKET

The responses given by the investors in the part I of questionnaire designed

for the survey, decisions taken by the individuals for investing in primary
market, are summarized as below.

1. The decision based on, investment in listed companies with good

current market price, received the following responses:

Weights given No. of respondents Percentage

1.00 (least agree) 17 17.0
2.00 (some what agree) 10 10.0
3.00 (agree moderately) 16 16.0
4.00 (agree to a great extent) 20 20.0
5.00 (strongly agree) 37 37.0
Total 100 100.0

17%
37% 1.00
10%
2.00
3.00
4.00
5.00
16%
20%

From the 73 (73%) responses generated for weights 3, 4 and 5, indicate

that the investors agree that current market price is an important indicator
before investing in new issues.

39
2. The decision of investment based on advice from the broker,
received the following responses:

Weights given No. of respondents Percentage

1.00 (least agree) 31 31.0
2.00 (some what agree) 18 18.0
3.00 (agree moderately) 27 27.0
4.00 (agree to a great extent) 13 13.0
5.00 (strongly agree) 11 11.0
Total 100 100.0

11%
13% 31%
1.00
2.00
3.00
4.00
5.00

27% 18%

The responses generated for the weights 3, 4 and 5 indicate that 51 (51%)
of investors depend on the investment advice from the broker for investing
in primary market.

40
3. Personal analysis is the self-evaluation of the information contained
in the offer document by the investors. The decision of investment based
on personal analysis generated the following responses:

Weights given No. of respondents Percentage

1.00 (least agree) 8 8.0
2.00 (some what agree) 12 12.0
3.00 (agree moderately) 17 17.0
4.00 (agree to a great extent) 23 23.0
5.00 (strongly agree) 40 40
Total 100 100.0

8%
12%
40% 1.00
2.00
3.00
4.00
5.00
17%
23%

The 80 (80%) responses generated for weights 3, 4 and 5 together indicate

that investors do personal analysis of the offer document before investing
in the issue.

41
4. The distribution of investors who may sell shares after allotment is
made is as given below:

Weights given No. of respondents Percentage

1.00 (least agree) 27 27.0
2.00 (some what agree) 13 13.0
3.00 (agree moderately) 23 23.0
4.00 (agree to a great extent) 18 18.0
5.00 (strongly agree) 19 19.0
Total 100 100.0

19%
27%
1.00
2.00
3.00
4.00
18%
5.00
13%

23%

60 respondents (60%), have indicated that they may sell shares after
allotment in the primary market issues.

42
5. The distribution of investors, using analyst’s recommendations,
privately circulated, published or broadcasted is given as below:

Weights given No. of respondents Percentage

1.00 (least agree) 17 17.0
2.00 (some what agree) 12 12.0
3.00 (agree moderately) 23 23.0
4.00 (agree to a great extent) 26 26.0
5.00 (strongly agree) 22 22.0
Total 100 100.0

22% 17%
1.00
12% 2.00
3.00
4.00
5.00
26%
23%

The responses generated for the weights 3, 4 and 5 together indicate that
71 respondents (71%) use analyst recommendations for the investment
decisions in the primary market investments.

43
FACTORS AFFECTING PRIMARY MARKET ISSUES

Respondents gave ranks from 1 (most important) to 7 (least important) on

various factors affecting the primary market issues. These ranks were
summarized and also tabulated according to the respondent’s responses.

1. Issue price

Ranks given to issue price by respondents:

1.0 2.0 3.0 4.0 5.0 6.0 7.0

32 21 17 11 6 5 8

Ranks given to issue price by respondents

35 32
30
25 21
20 17
15 11
10 8
6 5
5
0
1.0 2.0 3.0 4.0 5.0 6.0 7.0

81 (81%) respondents gave issue price the first four ranks indicating that
it’s an important factor affecting primary market situation.

44
2. Information availability

Ranks given by various respondents based on information availability are

given as below:

1.0 2.0 3.0 4.0 5.0 6.0 7.0

21 20 17 14 16 6 6

Ranks given by various respondents based on

information availability
25
21
20
20 17 16
14
15

10
6 6
5

0
1.0 2.0 3.0 4.0 5.0 6.0 7.0

72 (72%) respondents have indicated that they would rank information

availability in the first four ranks. Thus, indicating that information
availability is an important factor affecting primary market issues.

45
3. Market price immediately after listing of securities and within the
first week

The combined ranks given to market price after listing are given as below:

1.0 2.0 3.0 4.0 5.0 6.0 7.0

15 17 19 16 13 11 9

The combined ranks given to market price after

listing
20 19
18 17
16
16 15
14 13
12 11
10 9
8
6
4
2
0
1.0 2.0 3.0 4.0 5.0 6.0 7.0

67 (67%) respondents gave market price after listing as an important factor

affecting primary market condition based on the first four ranks assigned
by them.

46
4. Liquidity after listing

The ranks given by respondents for liquidity after listing are as below:

1.0 2.0 3.0 4.0 5.0 6.0 7.0

11 13 17 17 20 11 11

Ranks given by respondents for liquidity after

listing
25
20
20 17 17

15 13
11 11 11
10

0
1.0 2.0 3.0 4.0 5.0 6.0 7.0

58 (58%) respondents gave first 4 ranks to liquidity after listing as a factor

affecting primary market.

47
5. Secondary market situation

The rankings given by respondents to secondary market situation as a

factor affecting primary market are as given below:

1.0 2.0 3.0 4.0 5.0 6.0 7.0

14 18 16 15 15 11 11

The rankings given by respondents to secondary

market situation
20 18
18 16
16 15 15
14
14
12 11 11
10
8
6
4
2
0
1.0 2.0 3.0 4.0 5.0 6.0 7.0

63 (63%) respondents ranked secondary market in the first four ranks, as a

factor affecting primary market.

48
6. Lead managers’ image

The ranks given by the respondents to lead managers’ image as a factor

affecting primary market situation are as below:

1.0 2.0 3.0 4.0 5.0 6.0 7.0

8 14 14 16 13 17 18

The ranks given by the respondents to lead

managers’ image
20 18
18 17
16
16 14 14
14 13
12
10 8
8
6
4
2
0
1.0 2.0 3.0 4.0 5.0 6.0 7.0

The first four ranks were given to lead managers’ image by 52 (52%)
respondents.

49
7. Regulatory environment

The ranks given by the respondents to the regulatory environment, as a

factor affecting primary market, are given as below:

1.0 2.0 3.0 4.0 5.0 6.0 7.0

11 11 12 10 14 20 22

The ranks given by the respondents to the

regulatory environment
25 22
20
20

14
15 12
11 11
10
10

0
1.0 2.0 3.0 4.0 5.0 6.0 7.0

44 (44%) respondents to regulatory environment gave the top four ranks.

56(56%) respondents gave the last three ranks to the regulatory
environment as a factor affecting primary market situation.

50
 LIMITATIONS

The following limitations can be pointed out from the research that I
conducted in relation to the research problem:

1. The sample size chosen for the questionnaire was only 100 and that may
not represent the true picture of the investor’s perception about the Indian
primary market.

2. The research got confined to the city of New Delhi and there also it was
conducted in places adjoining Religare.

3. Nearly 80% of the respondent belonged to the age group of 20-40 years
and only 20% were above 40 years old. So, in collecting the responses the
opinion of the experience and aged people were not available. So, the
findings may not be correct when we think about the opinion of the elderly
people about the primary market.

4. The people who were selected for the questionnaire were done on the
basis of simple random sampling. So, there were certain cases in which the
person selected did not had any current investments in securities market.

51
 THE CONCLUSION

In the first part of the study, the decisions taken by small investors while
investing in equity primary markets were studied. The decisions studied
were investment in listed companies with good current market price,
investment based on the advice from the broker, personal analysis of the
offer document, selling shares after allotment and using analysts’
recommendations in investment decisions. 73% of investors indicated that
current market price is important. 51% investors use investment advice
from the broker. 80% of the investors do personal analysis of the offer
document before investing. 60% indicated that they may sell shares after
allotment. 71% investors use analysts’ recommendations in the investment
decisions. This indicates the importance given to current market price,
personal analysis and analysts recommendations.

In the second part of the study, factors affecting primary market situation
are studied. These factors are issue price, information availability, market
price after listing, liquidity after listing, secondary market situation, lead
managers’ image and regulatory environment. The issue price emerges as
one of the important factor affecting primary market issues with 81% of
respondents giving first four ranks to issue price. 72% respondents gave
first four ranks to information availability as a factor affecting primary
market situation.

67% of respondents gave market price after listing as an important factor

affecting primary market condition. 58% respondents gave liquidity as a
factor affecting primary market condition. 63% of the respondents ranked
secondary market situation as an important factor affecting primary market

52
situation. 52% of the respondents ranked lead managers image as an
important factor affecting primary market situation. 44% of the
respondents ranked regulatory environment as an important factor
affecting primary market situation.

Securities and Exchange Board of India (SEBI) – National Council for

Applied Economic Research (NCAER) report (June 2000) indicates that
despite the expansion of the securities market, a very small percentage
(1.4%) household savings is channeled into the securities market.
Out of 12.1 million equity investors, 84% have invested in equity market
through primary market. Thus primary markets play an important role in
bringing investments into equity markets.

Also the report indicates that 80% of equity investor households were first
generation investors. So retaining their confidence is important. Report has
also indicated that there is a decrease in preference for equity due to the
losses made in investments by the investors in equity markets.

These losses in primary market are due to lower market price after listing.
The study conducted on investor confidence also indicated the importance
of issue price and market price, which were given an overall first and third
respectively.

SEBI – NCAER report also indicated that safety and liquidity are two
primary considerations for choosing an asset. Safety in primary market
implies that market price after listing should not fall below the issue price.
Numbers of issues are trading at a discount to the issue price. Thus again

53
issue price and market price relationship is an important concern, which
needs attention.

Liquidity in primary market implies ability to sell shares any time after
listing without a substantial loss in investment value. Liquidity was ranked
fourth in the investor confidence survey only behind market price.

Another aspect identified by SEBI – NCAER report is that inadequate

diversification of portfolio is the main reason for lack of protection from
volatility in the market. For proper diversification, information about
investment avenues or financial assets, also macro and micro level changes
affecting market prices and understanding about diversification is
important. Thus information about the issue and how it is going to affect
ones own portfolio is to be analyzed.

The investor confidence survey also indicates that information availability

is second important factor, next to issue price. It indicates that investors
prefer personal analysis to broker’s advice.

For carrying out personal analysis also information is required. Thus

information plays an important role in investment decisions and needs of
the investors in this area also need to be addressed.

Society for Capital Market Research and Development (SCMRD) (June

2001) report indicates that the reforms made secondary market safer but
primary market is still perceived riskier than before. Thus policy initiatives
are required for reducing this perceived risk. Investors have suggested
number of recommendations in this regard.

54
 RECOMMENDATIONS

The sample investors were asked to give their suggestions for

improvement of primary market situation and they gave the following
measures for strengthening primary market.

1. INFORMATION RELATED MEASURES

a. Latest and easy availability of information
b. Public information should be available
c. Education of investors
d. Transparency in the system
e. Improve awareness of investors in the primary market
f. Sensitive information should be made available to everyone at the same
time
g. Action against issue managers, analysts and company for providing over
optimistic and wrong information
h. Information related to promoters background and project
implementation experience should be available

2. SCANDALS
a. No scandals
b. Regulation to control scandals
c. Prevent corporate frauds
d. Bogus companies not to be allowed to raise funds

3. PROMOTERS
a. Strict action against cheaters
b. Moral character of Board of Directors to be checked

55
c. Only experienced promoters should be allowed
d. More transparency in activities
e. Dishonest promoters not to be allowed to raise funds
f. At least 3 years of good past performance of companies
g. At least 5 years of experience of promoters in the industry
h. Disclosure of loans taken from various sources

4. PUBLIC
a. More active investor associations to be provided
b. Public consciousness development is important
c. Understanding the riskiness associated with investment in shares

5. RELATIONSHIP WITH SHAREHOLDERS

a. Provide better service
b. Investors to have a say in decision making process
c. Better communication between top management and shareholders
d. Shareholders’ interest to be considered while companies take decisions

6. RETURNS TO SHAREHOLDERS
a. Security of investment
b. More liquidity in primary market investment

7. REGULATIONS
a. Tighter regulations
b. Stable companies allowed to enter market
c. Market price control
d. Companies with good image of disclosures only to be allowed
e. Stability of market

56
f. Transparency in operations
g. Simplified and stringent procedures to be adopted
h. Issue price should be controlled
i. Post listing performance of company to be monitored
j. Autonomy to regulatory authorities
k. Minimum standards for companies to enter market
l. Prompt action against companies with complaints
m. De-Mat account information should be proper and regular
n. Black list brokers, underwriters and merchant bankers
o. More stringent screening of securities
p. Ensure market stability.

8. GOVERNMENT
a. Improve infrastructure
b. Improve economic condition
c. Abolish taxes on investment in shares
d. Promote and attract investors
e. Consumer friendly enactments are necessary
f. Corruption to be checked at various levels
g. Correct rating of equity
h. Take steps to protect small investors
i. Develop stable policies
j. Grievance redresses machinery should be more efficient

9. INTERMEDIARIES
a. Improve faith in brokers
b. Honesty and fair dealing in brokers should be encouraged
c. Lower brokerage

57
d. Improve relationships with customers
e. Broker activities are to be regulated
f. Reduce number of brokers
g. Take action against brokers with bad conduct
h. Brokers with good research facilities to be allowed
i. Banks and Financial Institutions to play a leading role

10. MARKETS
a. Improve trust of small investors
b. Transparency of markets
c. Volatility to be checked
d. Better IPO Grading mechanism
e. Market vigilance is important
f. Proper audit of exchanges should take place
g. Improve liquidity
h. Allow good issue managers to manage issues
i. Delisting of companies should be avoided
j. Proper information on post listing activities should be made available by
stock exchanges to investors
k. Renew faith in the long-term
l. Ensure new investors’ confidence in the market
m. More investment avenues to be made available
n. Small investors to get firm allotment
o. Liquidity should be improved

58
 BIBLIOGRAPHY

WEBSITES:
http://www.nseindia.com
http://www.sebi.gov.in
http://www.investor.sebi.gov.in
http://www.bseindia.com
http://www.religare.in
www.google.com
www.wikipedia.org
http://investopedia.com
www.primedatabase.com

BOOKS:
Bhalla V. K., Security Analysis And Portfolio Management, 8th Edition, S.
Chand & Company Ltd. Pg. 44 – 54.
Chandra Prasanna, Investment Analysis And Portfolio Mangement, 2nd
Edition, TMH Publishing Company Limited. Pg. 84 - 89.
Pandey I. M., Financial Management, 9th Edition, Vikas Publishing House
Pvt. Ltd. Pg. 417 – 424.

NEWSPAPER ARTICLES READ:

Who will protect the small investor, Economic Times, 11th July, 1994
Who cares for small investors?, Economic Times, 10th Jan, 2001
Small investors don't get share of pie, Asian Age, 5th Feb, 2003

59
 QUESTIONNAIRE

Dear respondent, your valuable time and effort in filling this questionnaire
are highly appreciated. The information collected through this
questionnaire will be used for academic purpose only.

Personal details:
Name: ________________________ Age: _______
Occupation: ____________________

PART I: Decisions.
Given below are some of the decisions taken by the individuals for
investing in primary market.
If you strongly agree put a tick (√) under 5 and if you least agree put a tick
(√) under 1. Points 2, 3 and 4 refer to various levels of agreement starting
from somewhat agree, agree moderately and agree to a great extent. Please
tick relevant box as per your choice. I request you to tick only one box per
decision.

Decision 1 2 3 4 5
1. I invest in primary market issues of listed [ ] [ ] [ ] [ ] [ ]
companies with good current market price.

2. Investment decision is based on advice from [ ] [ ] [ ] [ ] [ ]

the broker.

3. I invest in shares based on personal analysis. [ ] [ ] [ ] [ ] [ ]

60
4. I sell shares after allotment. [ ] [ ] [ ] [ ] [ ]

5. I use analyst’s recommendations either [ ] [ ] [ ] [ ] [ ]

privately circulated, published or broadcasted.

Part 2: Factors affecting equity primary market issues.

Please rank the following factors in the order of decreasing importance, 1
highest and 7 lowest.

Factors Rank
a. Issue price ____
b. Information availability ____
c. Market price immediately after listing ____
d. Liquidity after listing ____
e. Secondary market situation ____
f. Lead managers image ____
g. Regulatory environment ____

Part 3: Revival measures

What important measures need to be undertaken to strengthen primary
market situation?
a. _______________________________________________________
b. _______________________________________________________
c. _______________________________________________________
d. _______________________________________________________
e. _______________________________________________________

61