A study by the Securities and Exchange Board of India (Sebi) found that most investors who were allotted shares in an initial public offering (IPO) sold them within a week of listing. Sebi noted that individual investors sold 70% of their shares by value within a year.
The study analyzed data from 144 IPOs listed between April 2021 and December 2023. It revealed that investors were more likely to sell shares that had positive listing gains than those that listed at a loss. Specifically, when IPO returns were above 20%, investors sold 67.6% of the shares by value within a week. In contrast, only 23.3% of shares were sold when returns were negative.
The study also highlighted a drop in the number of high net-worth individuals participating in IPOs after the Reserve Bank of India (RBI) introduced a ₹1 crore cap on IPO financing in April 2022. Oversubscription in the non-individual investors category decreased from 38 times to 17 times, and the average number of applications from high net-worth investors dropped significantly.
Geographically, 70% of IPO investors were from the states of Gujarat, Maharashtra, Rajasthan, and Uttar Pradesh. Investors from Gujarat received the largest share of IPO allotments.
Additionally, Sebi’s chairperson, Madhabi Puri Buch, chose not to discuss Real Estate Investment Trusts (REITs) at an industry event due to concerns about a conflict of interest.
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