What Ails India's IPO Market?

Is greed killing the initial public offering (IPO ) market in India?

In recent weeks, several large equity offerings, including those from reputable business houses, have struggled to hit their targets. India's stock markets have been volatile , reacting to fears of a widening global credit crunch and fears of a U.S. recession . Wharton professors and investment experts interviewed by India Knowledge@Wharton say that while markets correct themselves every now and then, their imperfections also show up at such times.

In January, the Indian primary equity market was chalking up new records. Now, suddenly, there are hardly any takers for new corporate paper.

The first casualty of the Indian IPO bubble was, ironically enough, a hospital. On February 7, Wockhardt Hospital pulled out its Rs. 676 crore ($178 million) IPO. It had exhibited all the signs of a patient on his last legs. The price band of the book-built issue was lowered from Rs. 280-310 ($7-$8) to Rs. 225-260 ($6-$7). The last date for subscription was extended. ...