MUMBAI, Sept 29: The slowly reviving primary issues market is drawing investors in droves, causing a massive fund flow to software issues. Investors have even started pulling out funds from secondary stock markets and stopped financing badla (carry-forward rates) in order to put funds in software IPOs (initial public offerings).Hughes Software Systems (HSS) which closed the first ever book-built equity IPO in the domestic market on Wednesday has evoked a whopping demand of approximately Rs 6,000 crore ($ 1.4 billion), making it perhaps the largest ever subscription to an offer in the Indian capital market.Compucom Software Ltd, a Jaipur-based software company which entered capital market on September 20 with an issue of 14.41 lakh equity shares of Rs 10 each at a premium of Rs 65 crore has been oversubscribed by 16 times. It has collected a total amount of Rs 91.26 crore against Rs 5.40 crore sought to be raised by the company.According to merchant bankers, the demand for software shares was evenlygenerated by institutional and retail investors. ``Investors included mutual funds, financial institutions, banks, foreign institutional investors, corporates, high net worth individuals, non-resident Indians and the small investors,'' said a merchant banker.The primary market was in the doldrums for the past few years, partly due to an economic slowdown and partly because of investor wariness with IPOs after burning their fingers in the boom of 1993-94, when a lot of dud issues entered the market. ``Now software issues are getting maximum response. Seeing this response, there is a chance that fly-by-night operators will enter the market and raise funds. Investors and SEBI should be careful,'' said a merchant banker.Software shares have been a hot favourite on the stock exchanges for more than two years now and valuations have shot up immensely, tagging a global trend. Polaris Software, which issued shares at a premium of Rs 200, was quoted at Rs 775 on the first day of trading on Wednesday. Shares likeInfosys Technologies, CMC Ltd, Wipro and Digital Equipment have soared between 130-420 per cent since the start of the year. Others like Pentafour Software and Exports, NIIT, Mastek and Satyam Computer Services are also ruling very high, even after bonus share offerings. ``This is reason enough for investors to go for new software IPOs instead of putting money in secondary shares in stock markets,'' said a broker.
