Sep 17, 2024 03:37 PM IST
India’s IPO market defies global trends, capturing 25% of global volumes in 2024. With over 5,450 mainboard listings, it outperforms international markets.
The Initial Public Offering (IPO) market in India has turned out to be an outlier in itself and is bucking the subdued global public issue trends.
A report released by wealth management firm Angel One Wealth noted that while the global IPO market peaked in 2021, India has been the outlier with public listings in the last year because of strong demand and domestic inflows, with emerging sectors and companies.
Most notably, in the first half of 2024, India captured a quarter of global IPO volumes, and in the process, the country now has the highest number of mainboard listed companies globally at over 5,450.
For global markets, 2021 was the watershed year for new listings as 2,388 companies raised USD 453.3 billion via IPOs, the highest in the past 20 years, the report noted citing various open sources.
In 2023, 178 companies made their debut in the stock exchanges, followed by China at 103, the US at 21, and the UK at 22, the report noted.
“BSE IPO index with 348% absolute gains has outperformed benchmark BSE 500 index’s 165% gain by wide margin, thanks to strong listing gains,” the report said, explaining how IPOs performed versus the broader market.
Among the IPOs, SME IPOs have trumped mainboard IPO in listing gains, the report showed. “Average listing gains in SMEs have skyrocketed from 2 per cent in 2019 to 74 per cent in 2024, while average listing gains in mainboard IPOs peaked out in 2020 and have been range bound around 30 per cent since then,” the report read.
Companies in consumer products and retail; diversified industrial products; financial services; healthcare were some of the sector who tapped the IPO the most, as per the report.
Earlier, a study conducted by the Securities and Exchange Board of India (SEBI) recently found a strong disposition effect among investors, who displayed a greater tendency to sell shares from initial public offerings (IPOs) that recorded positive listing gains compared to those that listed at a loss. The disposition effect refers to the tendency of investors to sell assets that have increased in value while holding onto assets that have decreased in value.
Given the increasing participation of retail investors and the heightened oversubscription in recent IPOs, SEBI undertook an in-depth study to analyse investor behaviour in IPOs. The study covered data from 144 IPOs listed between April 2021 and December 2023. The study also found that returns on shares influenced investor selling behaviour.
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