The effects of the mega subscription to the Rs 10,000 crore (Rs 100 billion) Oil and Natural Gas Corporation offer are expected to be felt in the markets for a long time. In the immediate future, the subscription levels have restored stability to the markets.

A quick Business Standard poll of 24 brokers, mutual funds and high net worth individuals shows they expect the excess subscription, when refunded, to flow into the secondary markets, boosting share price indices.

Business Standard posed two questions in the poll: what will be the impact of the ONGC issue on the markets, both in the short and long term?

Secondly, does the oversubscription mean any qualitative changes in the markets?

Indeed, 100 per cent of the respondents to the poll underlined the afterglow of the huge subscription on the first day of the issue (Friday), when the Sensex perked up by 64 points (1.1 per cent).

Over the longer period, 21 of the 24 respondents pointed out that the new set of investors coming to the ONGC issue are expected to stay on longer in the Indian markets, leading to increased liquidity and better share prices.

The remaining three respondents (who, incidentally, were all brokers) said the bulk of the investments on the first day "must have come from speciality funds, globally focused on the oil and gas sectors."

Their point was that these investors are very specific in their investment strategies and they are unlikely to buy any other stocks.

But all respondents said the issue was a landmark. "The market needed a direction," said a fund manager at a foreign fund house, "and this has been provided by the ONGC issue."

The momentum from this and new investors who have come in as a result will sustain the market for a long time," he said.

More importantly, 89 per cent of the respondents felt that the short-term liquidity concerns have been laid to rest. Thus, the volatility in the market since the beginning of this year is expected to die down.

Another long term effect of the ONGC float is that its weightage in the Morgan Stanley Capital Index will go up after the addition to its free float, which will put India on the investment radar of many more funds that are currently not invested in India.

More than 90 per cent of the respondents indicated that in the long-term, more foreign funds will be investing in Indian equities following the increased weightage in the MSCI India index.

As a few respondents said, the added benefit to the markets from the ONGC roadshows is that many more global investors are now "aware of the India story."

As a consequence, new big foreign funds are expected to enter the Indian market in the coming months. Many of the new funds which have subscribed to the issue are expected to stay on in the markets.

Sanjay Sinha, a petro-fund manager with UTI Mutual Fund said, "The liquidity concerns in the markets seem to be over as the response to the offer has been excellent...We expect more foreign funds to enter India as the visibility of the India story is now increasing in foreign markets."

A leading BSE broker said, "ONGC will be the bellwether of the stock markets in 2004 and the next five years will be good for the India oil and gas sector."

The ONGC issue has proved that there is enough appetite for Indian paper in overseas markets as well.

Most of those polled felt that what could not achieved in all the last three years has been achieved in just one month in terms of the amount mobilised from the primary markets.