Econometric Forecasting of Money Mobilization Through Public Issues in Indian Primary Capital Market using Box-Jenkins ARIMA Model

Abstract

Corporate finance is raised from the primary capital market through public offers, rights issues and private placement, etc. Public offer is the largest sources of funds from the primary capital market to the company. Basically, an invitation is made by a company to the public to subscribe to its securities offered through prospectus is called as public offers, which can be adopted either under fixed price, book- building method or pure auction method. Public issues are of two types, namely Initial Public Offer (IPO) and Further Public Offer (FPO).  The study analyses the trend and forecasting of money mobilization through public issues in Indian primary capital market during 2000-2001 to 2020-2021 based on data during 2000-2001 to 2018-2019 using ARIMA Modeling. The study finds that the ARMA (6, 5) model has become the best model to depict the behaviour of the first differences of the capital raised through public issues over the study period. The study also explores that the forecast values of capital raised through public issues in India for 2018-2019, 2019-2020 and 2020-2021, may be 95100.58, 119465.6, and 107820.3 (crore in rupees), respectively.

Keywords: Indian Primary Capital Market, Resource Mobilization, Public Issues, ARIMA Model.