IPO sector remained soft due to weakness in mid-smallcap stocks

Ahmedabad: There is a sluggish trend in the IPO sector due to weakness in mid-smallcap stocks. Weakness in the equity market is likely to put pressure on investor participation in the primary market. Its effect will be seen on the IPO market. Application levels have declined in the last few days and the last 4-5 IPOs have performed poorly. Even in SME issues the gray market premium is no longer what it used to be.

According to a report by Prime Database, 57 Indian companies raised Rs. 49,434 crores were collected, which in 2022 will be Rs. This is 17 percent less than the amount of Rs 59,302 crore. However, if we exclude LIC's IPO in 2022, the amount raised was 28 per cent higher than last year.

By the beginning of calendar year 2024, Rs. 27 companies planning to raise Rs 28,500 crore have received approval from the Securities and Exchange Board of India (SEBI) for IPOs. But they are not moving forward. Another 36 companies planning to raise Rs 40,500 crore were awaiting SEBI approval.

BSE's smallcap and midcap indices fell 5 per cent in six trading sessions as SEBI raised fears of price manipulation and bubble-like situation in both these segments. Both BSE indices are down about 11 per cent from their February highs.

Analysts say RBI's recent action on non-banking financial companies could put pressure on cash flows in the primary market.

The attractiveness of IPOs has weakened amid the recession in major markets. Therefore, companies wishing to raise capital through the primary market may postpone their plans. Analysts say that the effect of this weakness can also be visible on the price and size of the IPO.