SEBI Study Reveals 54 Per Cent Of IPO Shares Sold by Investors Within a Week

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Mumbai: More than half of the investors in initial public offerings (IPOs) between April 2021 and December 2023 sold the shares within a week of listing, a study by the Securities and Exchange Board of India (SEBI) revealed on Monday.

In light of the increasing participation of retail investors and the heightened oversubscription in recent IPOs, the market regulator conducted an in-depth study to analyse investor behaviour in Main Board IPOs.

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 IPO returns exceeded 20 per cent, individual investors sold 67.6 per cent of the 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.

Nearly half of the demat accounts that applied for IPOs between April 2021 and December 2023 were opened during the post-COVID period.

According to the study, the period between April 2021 and December 2023 saw a total of 144 new companies making their debut on the in the stock market through main board IPOs.