The National Stock Exchange, in association with K Kanti Swarup, an academician, recently conducted a survey on investor confidence and their perception of the primary market (equity) in India. The survey has thrown up some interesting results.

According to investors, the current market price of a scrip is an important factor to be considered before investing in a new issue.

In fact, along with the market price the issue price is a major determinant affecting investments into primary issues. Information availability was also ranked as equally important but price is a major factor.

Contrary to popular perception, investors do not pay too much attention to their brokers for investing in primary issues. In other words, broker tips or advice do not influence them unduly in this matter.

In fact most of the investors indicated that they prefer to do their own analysis before investing. However, investors do give a lot of weight to recommendations made by analysts before investing in new issues.

Interestingly enough, the lead manger managing the issue is also factored in while deciding whether to invest in a new issue or not. It is felt that of the lead manager is good the issue might be worth investing in.

The interpretation is that good lead managers associate themselves with good companies and the other way around.

Other factors such as liquidity and secondary market situation also contribute a bit to the decision making process.

There is an overriding concern with liquidity - this obviously means that investors are not getting enough exit opportunities or that they fear rigging of share prices or manipulation.

However according to the survey, there was no definite indication on whether investors sell or do not sell their shares after allotment.

This would be a totally subjective decision based on whether the investor has a need for funds. But most investors - strictly retail - prefer to hold on to their investments rather than try to make a quick buck.

So far as improving the primary market scene is concerned, investors laid a lot of emphasis on accessibility and availability of information.

This was all the more important in case of sensitive information and investors said that sensitive information should be made available to everyone at the same time.

Since too optimistic forecasts by analysts and issue managers often mislead investors the latter have sought "actions against issue managers, analysts and company for providing over optimistic and wrong information," as a part of measures for protecting investors.

In fact the investors also said that there should be regular advertisements on the improvements taking place in the market.

Investors were particularly distressed over scandals plaguing the stock markets and their suggestions include - regulation to control scandals, prevention of corporate frauds and "bogus companies not to be allowed to raise funds."

This also applies to dishonest promoters. There is also a demand for disclosure of loans taken from various sources.

With respect to relationship of the company with shareholders, investors have sought better service, having a say in the decision making process, better communication between top management and shareholders interests to be considered while companies take decisions.

Incidentally, there is also some confusion among investors. In the same breath they talk of "tighter regulations" and "excess regulation to be avoided." They also want the issue price to be controlled and better methods of determining issue price.

This will mean that the current book-built method, which is considered to be an efficient price-discovery mechanism based on demand and supply, might not be to their taste. They have also said that post-listing performance of a company should be monitored.

In book-built issues, small investor generally gets swamped by the sheer power of the larger investors. Investors have asked for small investors to get firm allotment.

Participation by financial institutions, banks and mutual funds is also seen as a way of stabilising the markets.