The IPO and NFO fever

There is a sudden craze for investments in equities. Whether it is because of sky rocketing sensex that has created new hopes in stock markets or surplus cash with the educated middle class, companies are able to raise huge amounts. IPOs are creating records in terms of market cap raised one after the other. DLF followed by ICICI and now Reliance Power. Junta is not thinking twice to invest in securities. The returns are definitely high and more than in any other form of investment. The present market price of the ICICI or DLF or NTPC are more than 3-4 times their initial selling price. Clearly returns of 200-300%.

The present Reliance Power and Future Capital IPOs have created a new demand for demat accounts and it is not surprising that broking companies have ran out of stamp papers and forms. Any new request or a service request for an exisiting account is taking too much time. Stock brokers are coming up with innovative ways to help the investors buy shares even without a demat account(they allow people to subscribe by giving random DP Ids and by the time shares get allotted, demat account will be opened). Within few hours of the start date, Rel Power is subscribed four times..God knows how much it will be by 18th Jan.. Eventhough the chances are very unlikely (1 among 10 may be allotted shares) that every investor gets the amount of shares he subscribed for, there is no hesitation in peoples mind.

It is not just with IPOs, even in case of mutual funds, the investments have seen a rise of 25% over the last two years. Any New fund is making a killing with investors trying to put their money in diversified portfolios and thus reducing the risk of any loss. Also the tax saving advantage that some of the mutual funds carry is definitely the best option for a long term investment which returns back with dividends from time to time and good amount of tax benifit.

Definitely peoples risk appetite has increased and every has a dream to become a Warren Buffet.