The primary markets are in an irrational frenzy, with investors applying to issues because of a fear of missing out (FOMO), Vijayakumar Chief Investment Strategist at Geojit Investments told NDTV Profit on Wednesday.
The statement comes in the backdrop of 10 active mainboard initial public offerings (IPOs), six of which have opened for bidding today itself.
The Geojit Chief said that he was not trying show all IPOs under the same light as "there are IPOs, good quality IPOs, fairly valued IPOs, and certainly retail investors can look into that. But discretion is the better part of FOMO."
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"Investors have to apply a lot of discretion. They have to separate the wheat from the chaff. But they're not doing that now," the market expert underlined.
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Vijaykumar pointed out that everyone seems to be jumping on the IPO bandwagon, including Foreign Institutional Investors (FIIs), who have invested heavily in IPOs in recent days, while engaging in steep selloffs of Indian equities in the secondary market.
"Foreign institutional investors have sold stocks for 284,000 crores till yesterday through the secondary market, through the exchanges," he said, adding that these same investors have pumped in 36,000 crore in the IPO market as anchor investors.
Vijayakymar emphasised that the stark contrast in investment choices is significant, however, it is based off of a momentum or frenzy in the IPO market which is unlikely to continue.
However, he underscored that investors need to apply discretion and park their money in good quality IPOs, "which are backed by very good promoters with a good track record, reasonably priced, very good growth prospects."
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