IPO Market: Since the year 2023, the trend of IPOs coming on the stock market is increasing rapidly. This gives tremendous benefits to the companies as well as the investors. Now a report by market regulator SEBI has revealed that more than 50 percent of retail investors are making profits by selling the shares allotted in the IPO within a week of listing. They are not making long term investments.
54% of shares are sold in a week on positive listing
SEBI has said in its report on Monday that according to the data of 144 mainboard IPOs that came between April 2021 and December 2023, there has been a tremendous increase in the sale of shares after the IPO listing. About 54 percent of the investors are selling their share of shares within a week of positive listing. On the other hand, anchor investors have to hold their shares for a long time due to the lock in period. Individual investors sold 50.2 percent of the shares they got within a week of listing. Non-institutional investors (NII) sold 63.3 percent of the shares in terms of value. Retail investors have sold 42.7 percent of the shares. Individual investors sell 70 percent of their shares within a year.
Shares are sold rapidly as soon as there is a profit of more than 20 percent
According to SEBI, the flipping trend has been observed among individual investors. The number of demat accounts has also increased due to the high returns received through IPOs. A large number of demat accounts have been opened after the Covid pandemic. Investors have shown a desire to sell the shares received in the IPO quickly. It has been said that if the IPO return exceeds 20 percent, then individual investors sold 67.6 percent of the shares within a week. If the return was negative, only 23.3 percent of the shares were sold.
There has been a huge drop in the applications of NII investors
SEBI had made changes in the NII share allotment process in April 2022. Also, the Reserve Bank of India (RBI) had also changed the rules for financing IPOs by NBFCs. After this, oversubscription in the NII category has come down from 38 times to 17 times. Also, there has been a huge decline in the applications of large NII investors. The average number of NIIs applying for more than Rs 1 crore in IPOs has come down from 626 per IPO to about 20 per IPO.
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