After opening the day in red, Share markets in India have continued the downtrend and are presently trading deep in red. Sectoral indices are trading on a negative note, with stocks in the metal sector and stocks in the banking sector witnessing maximum buying interest.

The BSE Sensex is trading down by 250 points (down 0.7%) and the NSE Nifty is trading down 82 points (down 0.8%). Meanwhile, the BSE Mid Cap index is trading down by 0.8%, while the BSE Small Cap index is trading down by 0.4%. The rupee is trading at 64.54 to the US$.

In the news from the IPO space. The initial public offering (IPO) of HG Infra Engineering Ltd was subscribed by over 44%, the second day of the share sale.

The IPO is set to raise over Rs 4.6 billion from the proceeds.

The portion reserved for institutional investors was subscribed 7% and that of retail investors 84%.

HG Infra’s shares have been priced in a band of Rs 263-270 per share. The IPO will close today.

The initial share sale of HG Infra comprises a fresh issue of shares of Rs 3 billion and an offer for sale of 6 million shares by the promoters of the company.

At the upper end of the price band, the share sale will fetch the promoters about Rs 1.6 billion. Proceeds from the fresh issue will be used for buying equipment, repayment of debt and meeting general corporate expenses.

Speaking of IPOs, the demand for IPO’s had reached sky-high levels last year.

Poor IPO Returns Post Listing

One shall note that, more than 70% of the IPOs listed in 2007 and 2008 are in the red, even today when the Sensex is at an all-time high. But it doesn’t make sense to completely ignore this space. The IPO space has also given us names like Maruti, TCS, and Jubilant Foodworks Ltd (with returns over 4,000%, 1,000%, and 500% respectively) that have created immense wealth for shareholders.

For the retail investor, it is very important to ignore the noise and focus on the fundamental and valuations on the table. And more often than not, this approach works much better than following the herd.