The feared waterfall and some lifebuoys

When Street Food talked about the scare of the approaching waterfall last week, the prospect of this being a cascade of crude oil was remote. By the end of the week, that is what it had become. As crude oil crossed $113 a barrel, the Sensex had one of its biggest falls since the arrival of the new government. 'A marauding army' of Sunni militants, that is how The New York Times called the fighters of ISIS (Ismalist State of Iraq and the Levant), has sent the stock analyst calculations awry.

People have suddenly forgotten the tunes of Modinama and are now chanting the names of medieval cities in Mesopotamia. Soon you may hear, if Baghdad falls, Sensex loses 1,000 points. If Najaf also does, then back to 20,000, and so on. If the Shias answer the calls of their supreme leader Ayotollah Sistani, and hold Baghdad longer, the uncertainty could drag us into another painful period of going nowhere. Whatever comes out of it, the term 'marauding army' would haunt forever. I don't remember reading that phrase out of history text books and a Chengiz Khan biography. Certainly, not in a contemporary news report. May the god both groups pray to bring them peace soon and put back the markets on track. It is unfortunate that whenever the Securities and Exchange Board of India gets into the mood to stimulate the sleeping primary market, something much beyond its control plays havoc. Many of its previous measures in the past couple of years could not even be tested properly as the market for private sector public offers had completely dried out.

But let us hope that things play out differently for the greater common good of everyone: investors, issuers, regulators and even the government. Sebi has lined up a substantial number of changes and many of these address several practical problems and anomalies. You must have read about these, such as the Rs 400-crore minimum offer threshold, higher quota for anchor investors and OFS retail quota in the Business Standard over the past weeks. All these augur well for the primary market swelling with hungry companies looking to stack up for the long Modi bull run.

In this bouquet of roses there is an unintended thorn.

The Sebi proposal, which I honestly hope the Jaitley team shelves for now, is the measure to increase minimum public shareholding (MPS) for state-owned firms to 25 per cent from the current 10 per cent. Though Street Food agrees with this proposal in principle and had questioned the stepmotherly treatment for the private sector when it comes to the MPS, this may not be an opportune time to further crowd out private firms in the market for funds.

Already government firms lined up for divestment are sucking out all the liquidity from the Street, leaving little for private firms. If every journalist's dream of listing every PSU (LIC is the latest) in town comes true, we will be at the beginning of the next bear market. Save it for some time. Let us have one year without PSU divestment. That will be the real stimulus for the dead primary market.