BOMBAY: The stock markets are already facing a severe resource crunch; Bears have been hammering down the prices after the post-budget session. Corporate circles feel that an early resumption of trading is essential for the survival of the capital market Says R.Ravimohan, chief executive of Over the Counter Exchange of India (OTCED:”Panic and uncertainty in any investment climate is bad for the capital market. This will have a negative impact in the market.” This is the third time that the commercial capital of the country is being rocked by violence and mayhem.
As many as 14 companies are entering the capital market soon with public issues to raise finances for various projects, Merchant bankers and other fund managers are keeping their fingers crossed whether these companies will be able to garner the funds, Although the stock markets were reeling under the impact of a bear onslaught (the BSE sensitive index has slumped from the post-budget peak level of 2,893.13 to 2,318.56 on last Tuesday) the primary market was bristling with activity. A number of rights issues are scheduled to hit the market in the future. If the Bombay Stock Exchange (BSE) remains closed for a long time, they will bear the brunt. Even if the exchange resumes trading at the earliest, will things be normal again?
Uday Kotak, vice-chairman and Managing director of Kotak Mahindra Finance Ltd, feels that the well-planned bomb blasts in the city were likely to affect the primary market if the stock market remains closed for a long time, it would not be in the interest of investors.
Businessmen are worried a lot; the recurring mayhem in the city is likely to put hurdles in the fundraising plans of a number of companies.
“We must support the Government to restore normalcy. I’m confident that everything will be normal soon. The stock exchange authorities are doing everything possible to resume trading,” said Nimesh Kampani, chairman of JM Financial Consultants, a prominent merchant banking firm. Corporate circles don’t expect any reversal or slowdown in the reform process. It is generally felt that the Government cannot slow down the reforms as the economic growth is hinged on more liberalization. Bomb blasts and violence happen all over the world, including the United States, the cradle of capitalism.
Political unrest is not uncommon: in some of the Far East countries, where an economic boom is taking shape.
Will foreign fund flow, especially the much-talked about foreign institutional investors, come to India easily now? Banking circles feel it is premature 10 say whether foreign investment will be affected in a big way. Last year, before the Ayodhya problem started, India could not even garner $2 billion, “It will not be correct to say that foreign investors are queuing outside to. Invest in India,” said a senior banker. Kampani feels foreign investors will enter India at the appropriate. Time. The long-term future of the country is bight,” he said. Many other businessmen echoed this thinking. However, it was unanimously felt that recurrence of such violence in the future is not in the interest of the country and its economy. Kotak feels that there will be some problems in the short-term. A lot will depend on how the Government tackles the incident or how quickly it can bring the situation back to normal. Foreign television networks, including CNN and BBC, have already flashed the macabre bomb blasts across the globe.
Article extracted from this publication >> March 26, 1993
