Most IPO investors sold their shares within a week of listing: Sebi study

Most of the investors who got shares allotted in an initial public offering (IPO) sold their shares within a week, a study done by market regulator Securities and Exchange Board of India(Sebi) showed. The regulator said individual investors sold 70% of shares by value within a year.

The study encompasses data from 144 IPOs listed between April 2021 and December 2023. "The 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," Sebi said in a press release.

It said, when IPO returns exceeded 20%, individual investors sold 67.6% of the shares by value within a week. In contrast, only 23.3% of shares by value were sold when returns were negative.


The Sebi study also revealed a reduction in high networth individual category following Reserve Bank of India's cap of ₹1 crore on IPO financing in April 2022.

The regulator said over-subscription under the non- individual investors category halved from 38 times to 17 times.

"The average number of applications from NII investors applying for more than ₹1 crore in IPOs dropped from approximately 626 per IPO in the pre-policy period (April 2021 - March 2022) to around 20 per IPO in the post-policy period (April 2022 - December 2023),"Sebi said.

Of the 144 IPOs listed during April 2021- December 2023, 75% IPOs (108 in number) delivered positive returns.

As many as 26 IPOs delivered more than 50% listing day returns.

The study also revealed the geographical spread of investors in IPO.

About 70% of the IPO investors were from the top four states - Gujarat, Maharashtra, Rajasthan and Uttar Pradesh.

"The retail investors from Gujarat received 39.3% of the allotment in the retail category, followed by Maharashtra (13.5%), Rajasthan (10.5%). NII Investors from Gujarat received about 42.3% of total allotment in NII Category, followed by Maharashtra (20.4%) and Rajasthan (15.5%)," according to the Sebi study.

Buch abstaines from discussing REITs

Sebi chairperson Madhabi Puri Buch on Monday abstained from discussing Real Estate Investment Trusts (REITs) at an industry event. "There are regulations simplifying REITs. But today if I utter the word REIT, I am accused of conflict of interest. I will abstain from talking on REITs," she said.