Assessment of Market Performance and Influencing Factors of Indian Initial Public Offerings (IPOs)

Authors

  •   Anshika Agarwal Assistant Professor, Faculty of Management Studies, University of Delhi, Delhi - 110 007
  •   Purushottam Kumar Arya Assistant Professor (Corresponding Author), Department of Commerce, Delhi School of Economics, University of Delhi, Delhi - 110 007
  •   Harshal Patil Faculty of Management Studies, University of Delhi, Delhi - 110 007
  •   Vishal Kumar Laheri Assistant Professor, Institute of Management Studies, Banaras Hindu University, Varanasi - 221 005, Uttar Pradesh

DOI:

https://doi.org/10.17010/ijf/2025/v19i4/174948

Keywords:

initial public offer

, primary market return, secondary market return, market adjusted excess return, qualified institutional buyers

JEL Classification Codes

, G11, G15, G17

Paper Submission Date

, September 10, 2024, Paper sent back for Revision, March 3, 2025, Paper Acceptance Date, March 20, Paper Published Online, April 15, 2025

Abstract

Purpose : This study evaluated the short- and long-term market performance of Indian initial public offerings (IPOs) listed on the National Stock Exchange (NSE) between January 2019 and December 2022. The research aimed to assess sector-specific trends, the impact of institutional participation, and the influence of macroeconomic events, particularly the COVID-19 pandemic, on IPO performance.

Methodology : The study analyzed a sample of 138 IPOs using quantitative methods, including regression analysis, to determine key factors influencing subscription trends and post-listing performance. Primary and secondary market returns were examined to assess market resilience, with a sector-specific focus on finance and engineering.

Findings : The findings revealed that the financial sector demonstrated resilience, maintaining positive returns despite temporary downturns during the COVID-19 crisis. Post-pandemic, IPOs exhibited sustained positive performance. Institutional engagement was identified as a significant determinant of IPO subscription levels. The sector-wise analysis highlighted varying performances, with finance and engineering showing notable results.

Practical Implications : The study underscored the importance of institutional participation in IPO performance and provided valuable insights for investors, analysts, and policymakers. Understanding sector-specific trends and macroeconomic influences can enhance investment strategies and market forecasting.

Originality : This research contributed to the existing literature by offering a comprehensive assessment of IPO performance in India, particularly during and after a global crisis. It highlighted the sensitivity of IPO returns to external factors and methodological approaches, offering guidance for future investment decisions and policy frameworks.

Downloads

Download data is not yet available.

Downloads

Published

2025-04-01

How to Cite

Agarwal, A., Arya, P. K., Patil, H., & Laheri, V. K. (2025). Assessment of Market Performance and Influencing Factors of Indian Initial Public Offerings (IPOs). Indian Journal of Finance, 19(4), 40–59. https://doi.org/10.17010/ijf/2025/v19i4/174948

Issue

Volume 19, Issue 4, April 2025

Section

Articles
Crossref
Scopus
Google Scholar
Europe PMC

References

Abukari, K., & Vijay, J. (2011). Long term performance and predictability of initial public offerings (IPOs). In FMA Annual Meeting Program (pp. 176–190). Scientific Research. https://www.scirp.org/reference/referencespapers?referenceid=3264499

Agarwal, A., Aggarwal, S. P., & Gupta, S. (2019). Sustainable earnings: A new eye for emerging finance. Journal of Sustainable Finance & Investment, 9(4), 325–348. https://doi.org/10.1080/20430795.2019.1619338

Aggarwal, R., & Conroy, P. (2000). Price discovery in initial public offerings and the role of the lead underwriter. The Journal https://doi.org/10.1111/0022-1082.00312 of Finance, 55(6), 2903–2922.

Aggarwal, S. P., & Agarwal, A. (2016). A study of CAPM testing in Indian context. Ramanujan International Journal of Business https://doi.org/10.51245/rijbr.v1i1.2016.146 and Research, 1(1), 83–93.

Aggarwal, S. P., Gupta, S., & Agarwal, A. (2017). Earnings persistence and business strategies: An Indian analysis. Ramanujan International Journal of Business and Research, 2(1), 21–24. https://doi.org/10.51245/rijbr.v2i1.2017.135

Ahmad-Zaluki, N. A., Campbell, K., & Goodacre, A. (2007). The long run share price performance of Malaysian initial public offerings (IPOs). Journal of Business Finance & Accounting, 34(1–2), 78–110. https://doi.org/10.1111/j.1468-5957.2006.00655.x

Ahmad-Zaluki, N. A., & Kect, L. B. (2012). The investment performance of MESDAQ market initial public offerings (IPOs). Asian Academy of Management Journal of Accounting and Finance, 8(1), 1–23. https://ideas.repec.org/a/usm/journl/aamjaf00801_1-23.html

Arora, A. K., Kumar, S., & Kansal, A. (2024). Analysis of retail investors' attitudes toward IPO investments. Indian Journal of https://doi.org/10.17010/ijf/2024/v18i9/174459

Arora, N., & Singh, N. (2017). Factors affecting the academic performance of college students. Journal https://doi.org/10.26634/jet.14.1.13586 of Educational Technology, 14, 47–53.

Babu, R. C., & Dsouza, A. E. (2021). Post listing IPO returns and performance in India: An empirical investigation. Journal of Financial Studies & Research, 2021, Article ID 104815. https://doi.org/10.5171/2021.104815

Bancel, F., & Mittoo, U. R. (2009). Why do European firms go public? European Financial Management, 15(4), 844–884. https://doi.org/10.1111/j.1468-036X.2009.00501.x

Barry, C. B., & Jennings, R. H. (1993). The opening price performance of initial public offerings of common stock. https://doi.org/10.2307/3665965 Financial Management, 22(1), 54–63.

Bird, R., & Yeung, D. (2010). Institutional ownership and IPO performance: Australian evidence (Working Paper Series No. 6). The Paul Woolley Centre for Capital Market Dysfunctionality, University of Technology. https://ideas.repec.org/p/uts/pwcwps/6.html

Biswas, S., & Joshi, N. (2023). A performance based ranking of initial public offerings (IPOs) in India. Journal of Decision Analytics and Intelligent Computing, 3(1), 15–32. https://doi.org/10.31181/10023022023b

Bradley, D. J., Gonas, J. S., Highfield, M. J., & Roskelley, K. D. (2009). An examination of IPO secondary market returns. Journal of Corporate Finance, 15(3), 316–330. https://doi.org/10.1016/j.jcorpfin.2009.01.003

Chan, K., Wang, J., & Wei, K. C. (2004). Underpricing and long-term performance of IPOs in China. Journal of Corporate Finance, 10(3), 409–430. https://doi.org/10.1016/S0929-1199(03)00023-3

Chang, E., Chen, C., Chi, J., & Young, M. (2008). IPO underpricing in China: New evidence from the primary and secondary markets. Emerging Markets Review, 9(1), 1–16. https://doi.org/10.1016/j.ememar.2007.06.002

da Silva Rosa, R., Velayuthen, G., & Walter, T. (2003). The sharemarket performance of Australian venture capital-backed and non-venture capital-backed IPOs. Pacific-Basin Finance Journal, 11(2), 197–218. https://doi.org/10.1016/S0927-538X(02)00114-2

Dhamija, S., & Arora, R. K. (2017). Impact of quality certification on IPO underpricing: Evidence from India. Global https://doi.org/10.1177/0972150916668611 Business Review, 18(2), 428–444.

Dimovski, W., & Brooks, R. (2004). Initial public offerings in Australia 1994 to 1999, recent evidence of underpricing and underperformance. Review of Quantitative Finance and Accounting, 22(3), 179–198. https://doi.org/10.1023/B:REQU.0000025759.39918.89

Edwards, A. K., & Hanley, K. W. (2010). Short selling in initial public offerings. Journal of Financial Economics, 98(1), 21–39. https://doi.org/10.1016/j.jfineco.2010.03.010

Gompers, P. A., & Lerner, J. (2003). The really long-run performance of initial public offerings: The pre-Nasdaq evidence. The Journal of Finance, 58(4), 1355–1392. https://doi.org/10.1111/1540-6261.00570

Gupta, A., & Arya, P. K. (2020a). Growing importance of digital finance for financial inclusion and empowerment of women: Evidence from India. International Journal of Advanced Science and Technology, https://www.researchgate.net/publication/354765522 29(6), 1501–1510.

Gupta, A., & Arya, P. K. (2020b). Impact of splits on stock splits ratios around announcement day: Empirical evidence from India. Investment Management and Financial Innovations, 17(3), 345–359. https://doi.org/10.21511/imfi.17(3).2020.26

Hawaldar, I. T., Kumar, K. R., & Mallikarjunappa, T. (2018). Pricing and performance of IPOs: Evidence from Indian stock market. Cogent Economics & Finance, 6(1), Article ID 1420350. https://doi.org/10.1080/23322039.2017.1420350

How, J. C. (2000). Initial and long-run performance of mining IPOs in Australia. Australian Journal of Management, 25(1), 95–118. https://doi.org/10.1177/031289620002500107

Ibbotson, R. G. (1975). Price performance of common stock new issues. Journal of Financial Economics, 2(3), 235–272. https://doi.org/10.1016/0304-405X(75)90015-X

Jenkinson, T., & Ljungqvist, A. (2001). Going public: The theory and evidence on how companies raise equity finance. Oxford University Press. https://global.oup.com/academic/product/going-public-9780198295990?cc=in&lang=en&s

Kumar, A., & Totla, M. (2023). Do oversubscribed IPOs perform better in the long run? Evidence from the emerging economy of India. Indian Journal of Finance, 17(8), 27–42. https://doi.org/10.17010/ijf/2023/v17i8/173009

Lee, P. J., Taylor, S. L., & Walter, T. S. (1996). Australian IPO pricing in the short and long run. Journal of Banking & Finance, 20(7), 1189–1210. https://doi.org/10.1016/0378-4266(95)00053-4

Nigam, N. K., Singh, K., & Arya, P. K. (2022). Impact of gender diversity in boardroom on risk return profile of Indian corporates. Journal of Indian Business Research, 14(3), 213–230. https://doi.org/10.1108/JIBR-07-2020-0236

Pandey, A., & Pattanayak, J. K. (2018). Impact of firm specific and macro-economic factors on the level of underpricing of initial public offerings (IPOs) : Evidence from the Indian market. Indian Journal of https://doi.org/10.17010/ijf/2018/v12i2/121367 Finance, 12(2), 7–25.

Ritter, J. R. (1991). The long-run performance of initial public offerings. The Journal of Finance, 46(1), 3–27. https://doi.org/10.1111/j.1540-6261.1991.tb03743.x

Ritter, J. R., & Welch, I. (2002). A review of IPO activity, pricing, and allocations. The Journal of Finance, 57(4), 1795–1828. https://doi.org/10.1111/1540-6261.00478

Schultz, P. H., & Zaman, M. A. (1994). Aftermarket support and underpricing of initial public offerings. Journal of Financial Economics, 35(2), 199–219. https://doi.org/10.1016/0304-405X(94)90004-3

Singh, A. K., & Anand, A. (2020). A study on listing day price performance of BSE SME IPOs and its determinants. Indian Journal of Finance, 14(5–7), 44–61. https://doi.org/10.17010/ijf/2020/v14i5-7/153324

Singh, I., & Nayyar, A. (2017). Valuation errors and initial price efficiency of NSE listed IPOs. Indian Journal of Finance, 11(8), 50–61. https://doi.org/10.17010/ijf/2017/v11i8/117592

Singh, A. K., Jain, M. K., Jain, S., & Gupta, B. (2021). A new modus operandi for determining post - IPO pricing: Analysis of Indian IPOs using artificial neural networks. Indian Journal of Finance, 15(1), 8–22. https://doi.org/10.17010/ijf/2021/v15i1/157011

Siwach, P., Kumar, R. P., & Gupta, V. (2024). Looking beyond initial boost: Examining the long - term performance of small business IPOs. Indian Journal of Finance, 18(12), 8–23. https://doi.org/10.17010/ijf/2024/v18i12/174665

Sohail, M., & Raheman, A. (2010). Examining the short-run IPOs performance in state of economy: Normal, boom & recession. International Research Journal of Finance and Economics, 35, 173–186.

Srivastava, H., Solomon, P., & Singh, S. P. (2022). Oversubscription of initial public offerings of SMEs in India: A quantile regression analysis. Indian Journal of Finance, 16(7), 42–56. https://doi.org/10.17010/ijf/2022/v16i7/170634

Thomadakis, S., Nounis, C., & Gounopoulos, D. (2012). Long-term performance of Greek IPOs. European Financial Management, 18(1), 117–141. https://doi.org/10.1111/j.1468-036X.2010.00546.x