India’s capital market intermediaries and issuers needed to get the pricing of financial instruments right and take their own lead, capital market players said at an industry conference on Tuesday.

“The market has lost the ability to price anything with confidence,” R Ravimohan, MD & regional head, South Asia, of Standard & Poor’s said at a seminar.

Pricing of a financial instrument was at the crux of today’s problem, he added. “Today in the equity markets, the only metrics by which a company’s performance and fundamentals are measured is by price.”

Commenting on the stock market’s fall and deferring of share sales by some companies, Sebi Chairman CB Bhave asked if it was a bad time for IPOs or “is it really the price we are talking about”.

Traditionally, Asia had looked towards the western markets for pricing leads, said Ravimohan. “But that leadership has vanished. The US will take some time to come back. We must get on with our own understanding of pricing,” he added.

Right price

Merchant bankers and issuers were on the same side with regard to pricing, Mr Bhave said, adding that they had to ask themselves about the right price for an issue.

“If there is a good project, if it needs finances, there are people ready to fund the project, then finding the right price should not be so difficult. We need to get an answer to this,”  added Sebi chief Mr Bhave.

 Concentration of equity offerings from a single sector also tended to inflate prices.

 “Whenever the market had a concentration of IPOs from a few sectors, trouble was nigh,” said Enam Financial Consultants Chairman Vallabh Bhansali.