A Study of IPO Performance in India: Influences of Market Trends, Regulatory Frameworks, and Investor’s Sentiment

Author(s): Divyesh Bhandari and Dr. Jyoti Sah

Abstract:

This research explores the underperformance of Initial Public Offerings (IPOs) in the Indian market, with a focus on the influence of regulatory policies, market conditions, and company-specific factors. IPO underpricing, where a stock's listing price is significantly lower than its market value, is a common trend that can lead to poor long-term returns, especially for retail investors. The study investigates how variables such as issue price, number of pre IPO shareholders, subscription rate, NSE market performance, and policy impact affect IPO outcomes across different time periods-1 day, 1 week, and 1 year post-listing. Using data from 30 Indian IPOs between 2017 and 2021, a multiple linear regression model was applied to identify patterns and correlations. The findings reveal that higher issue prices generally lead to lower underpricing in the short term, making pricing decisions a key factor in IPO success. Market trends (NSE changes) significantly affect long-term IPO performance. Policy-related factors showed a mostly negative but indirect impact, indicating that while regulations aim to protect investors, they may also affect the ease and success of public listings. This study highlights the importance of proper pricing, market timing, and regulatory balance in IPO planning. The results are useful for companies planning to go public, policymakers aiming to strengthen investor confidence, and researchers exploring IPO behavior in emerging markets like India.

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Pages: 116-119     |    1 View     |    0 Download