Govt. turns down Sebi's rating plan for IPOs
New Delhi: Market regulator Sebi's proposal to have ratings for public issues, to act as a guide for retail investors, has been turned down by the finance ministry and ministry of company affairs (MCA).

Through such a rating system, it was SEBI's intention to enforce some kind of discipline on the pricing of IPOs as well as to ensure some clarity for retail investors, who are set to be inundated by a huge number of issues in the primary securities market. According to Prime Database, a capital markets think tank, the total volume of public issues in the calendar year 2006, is expected to be about Rs45,000 crore. Apparently, the regulator has found some issues with price to earnings ratios in the range of 55-80, which is a fanciful growth rate for most industries.

The finance ministry and the MCA have apparently communicated to SEBI that such ratings would only drive up the cost of public issues without lending any benefit to retail investors. The ministry of company affairs (MCA) has also rejected the alternative suggested by Sebi, which is to meet the rating costs by using proceeds from the Investor Education and Protection Fund (IEPF).

The volume of public issues in 2006 is expected to result in the highest-ever amounts of money being raised in a year in the Indian stock markets. The previous high was Rs30,511 crore in 2004.
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Indian markets among the world leaders in Q1 of 2006
Mumbai: India, along with three other emerging markets, is amongst the leaders at the top of the table in the first quarter of calendar year 2006, with an average 20 per cent in market returns.

During the quarter, Moscow Times of Russia topped the chart with 22.35 per cent returns, followed by OSE All Share of Norway at 20.81 per cent and Karachi 100 of Pakistan at 20.19 per cent. The benchmark BSE Sensex took he fourth spot with 20.03 per cent returns.

Among the other major markets, while Japan's Nikkei rose 5.89 per cent, Hong Kong's Hang Seng, Nasdaq composite, FTSE 100, and NYSE composite all gained over 6 per cent each. Australia's S&P/ASX 200, Straits Times of Singapore, ISE National-100 of Turkey and AEX General of the Netherlands gained over 7 per cent each.

The only Asian index to lose ground was South Korea's KOSPI, which fell around 1.4 per cent.

Market analysts however feel that India may under perform other emerging markets over the next couple of months since it is already overvalued. They point out that at a forward P/E of 17, the Indian equity market is commanding a higher valuation compared with the average P/E of 10-13 for other emerging markets.
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