New Delhi, Nov. 5 -- Another year, another initial public offering (IPO) frenzy. Or should I say another century, another country and another IPO frenzy? Because a mad rush for IPOs has been around as long as modern stock exchanges have existed. In 1881, there were 400 IPOs on the Paris bourse, with street sellers hawking prospectuses.

Talking of IPOs, most investors look at the names of big investors who have invested in a stock as a sign of its credibility. If large institutional investors-mutual funds, venture capital (VC) funds, foreign institutions or others-hold or buy a stock, many take it as a Good Housekeeping stamp of approval.

The common investor thinks that all these institutions must have done their due diligence, and that ...