More than half the investors in initial public offers between April 2021 and December 2023 exited the shares within a week of listing, said a study by the Securities and Exchange Board of India on Monday.
The study by the regulator to analyze investor behavior in Main Board IPOs comes at a time when participation by the retail category is increasing with heightened oversubscription in recent IPO issues.
It found "Flipping" behaviour among individual investors who sold 50 per cent of the shares allotted to them by value within a week of listing, and 70 per cent of shares by value within a year.
The SEBI study found a strong disposition effect, with investors showing a greater propensity to sell IPO shares that posted positive listing gains, compared to those that listed at a loss.
"When the IPO returns exceeded 20 per cent, individual investors sold 67.6 per cent of shares by value within a week. In contrast, only 23.3 per cent of shares by value were sold when returns were negative," the markets regulator observed.
Close to half of the demat accounts applied for IPOs between April 2021 and December 2023 opened during post COVID period.
The report said that a total of 144 new companies made their entry into the stock market through main board IPOs from April 2021 to December 2023.
Of the total number, at least 26 such offerings have their stock price surge more than 50 per cent on the day of listing.
There were over 90 IPOs that saw subscription in excess of 10 times with just two IPO remaining undersubscribed, the study noted.
After the RBI guidelines on IPO financing by NBFCs, oversubscription in the NII category halved from 38 times to 17 times, according to the SEBI study.
The average application from the Non-Institutional Investor category, that applied for an allotment of more than Rs 1 crore in IPOs, decreased from roughly 626 per IPO to about 20 per IPO, post the policy interventions by SEBI in the NII share allotment process.
Read also| Adani Energy Boosts Khavda Presence with 7GW Renewable Energy Transmission Project
