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Declaration

I hereby declare that the project entitled The Effect of the Secondary Market on the Pricing

of Initial Public Offerings in India is submitted as a part of my summer internship at

Standard Chartered Securities (India) Ltd. in partial fulfilment of requirements of PGDM

Program at Jaipuria Institute of Management, Jaipur.

The project has been done under the guidance of Mr. Krishan Deep Singhal, City Manager,

North Region, Distribution (company mentor) and Dr. Shailesh Rastogi (faculty mentor).

This report is not submitted anywhere else for completion of any degree or award. The

source of detailed study material which is used for reference to prepare this report ismentioned in references and bibliography.

Anusha Bansal

PGDM (2011-13)

Jaipuria Institute of Management, Jaipur

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Acknowledgements

I wish to express my deep gratitude to my mentor, Mr. Krishan Deep Singhal, City Manager,North Region, Distribution (Standard Chartered Securities (India) Ltd.) for giving me this

esteemed opportunity of interning in an organization where I learned a lot from everyday

experiences.

I am especially thankful to my faculty mentor, Dr. Shailesh Rastogi for building the

confidence in me to believe in the task that I am doing and for always being there to help me

cross hurdles.

I would like to convey my special thanks to Mr. Sayed Haider Abbas, Business

Development Manager, Standard Chartered Securities (India) Ltd. for allowing me to learnfrom practical, on-field experiences.

I would like to thank Standard Chartered Securities (India) Ltd. for making my summer

internship a delightful, learning event.

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Executive Summary

Title - The Effect of the Secondary Market on the Pricing of Initial Public Offerings in

India

By - Anusha Bansal, PGDM (2011-13), Jaipuria Institute of Management, Jaipur

Internship - Standard Chartered Securities (India) Limited

Period- 60 days (April 16, 2012 to June 15, 2012)

This project provides an empirical investigation of the role of the secondary market

in the pricing of initial public offerings.

The objective was to study the factors leading to underpricing and their prominence

in various industries.

Empirical tests conducted on a sample of IPOs provide insights about this

phenomenon. Exploratory Research has been done using secondary data, and

regression analysis using dummy variables.

On the basis of study, this project argues that incomplete spanning of the primaryissues in the secondary market and limited investor access play an important role in

the pricing of initial public offerings.

The work in the Distribution Department of the company as a summer trainee involves

contacting brokers and telling them about new IPOs in the market, especially the ones in

which Standard Chartered Securities is the lead manager. The distribution team at the

Barakhamba office of Standard Chartered Securities comprises of two people. Reporting is

done to Mr. Krishan Deep Singhal, City Manager, North Region, Distribution.

Learning from the internship was that it is very crucial for a company to provide after-dealservices to its customers and to follow-up with them from time-to-time. It is only then that

the customers remain loyal to the brand.

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References

Allen, F., and G. R. Faulhaber. Signalling by Underpricing in the IPO Market. Journal

of Financial Economics, 23 (Aug. 1989), 303-323.

Benveniste, L. M., and P. A. Spindt. How Investment Bankers Determine the Offer

Price and Allocation of New Issues. Journal of Financial Economics, 24 (Oct. 1989),

343-361.

Chemmanur, T. The Pricing of Initial Public Offerings: A Dynamic Model with

Information Production. Working Paper, Columbia Univ. (1989).

Grinblatt, M., and C. Y. Hwang. Signalling and the Pricing of New Issues. Journal of

Finance, 44 (June 1989), 393-420.

Guenther, A. E. The Pricing of Best Efforts New Issues.Journal of Finance (1992).

Ibbotson. R. G. Price Performance of Common Stock New Issues. Journal of

Financial Economics, 2 (Sept. 1975), 235-272.

Ibbotson. R. G., and J. F. Jaffe. Hot Issue Markets. Journal of Finance, 30 (Sept.

1975), 1027-1042.

Ibbotson. R. G.; J. L. Sindelar; and J. R. Ritter. Initial Public Offerings. Journal of

Applied Corporate Finance, 1 (Summer 1988), 37-45.

Ritter, J. R. The Hot Issue Market of 1980. Journal of Business, 57 (April 1984),

215-239.

Schipper, K., and A. Smith. A Comparison of Equity Carve-Outs and Seasoned Equity

Offerings: Share Price Effects and Corporate Restructuring. Journal of Financial

Economics, 15 (Jan./Feb. 1986), 153-186.

Tinic, S. M. Anatomy of Initial Public Offerings of Common Stock. Journal of

Finance, 43 (Sept. 1988), 789-822.

Welch, I. Seasoned Offerings, Imitation Costs, and the Underpricing of Initial Public

Offerings.Journal of Finance, 44 (June 1989), 421-449.

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Bibliography

Subscription patterns, offer prices and the underpricing of IPOs: Evidence from India

Arif Khurshed, Alok Pande and Ajai K. Singh.

Initial Returns, Long Run Performance and Characteristics of Issuers: Differences in

Indian IPOs Following Fixed Price and Book Building Processes Ajay Pandey.

After Market Pricing Performance of Initial Public Offerings (IPOs): Indian IPO

Market (2002-2006) Seshadev Sahoo and Prabina Rajib.

The Effect of the Secondary Market on the Pricing of Initial Public Offerings: Theoryand Evidence David C. Mauer and Lemma W. Senbet

NSE (National Stock Exchange) website www.nseindia.com

BSE (Bombay Stock Exchange) website www.bseindia.com

Standard Chartered website www.standardchartered.co.in

www.chittorgarh.com

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http://www.nseindia.com/http://www.bseindia.com/http://www.standardchartered.co.in/http://www.chittorgarh.com/http://www.nseindia.com/http://www.bseindia.com/http://www.standardchartered.co.in/http://www.chittorgarh.com/

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