BSE IPO index set for worst month since March 2020, shows data

India’s new stock listings are losing their edge as a worsening outlook for global equities leads investors to take profit from high-profile consumer technology stocks that debuted with inflated valuations.

The S&P BSE IPO Index, which tracks firms for two years after their listings, has plunged about 10 per cent so far this year and is headed for its worst month since March 2020, the onset of the pandemic.

The slump comes on the back of fading risk appetite toward equities as central banks around the world prepare to tighten monetary policy to quell inflation. In the US, more than two-thirds of shares that listed this year are trading at or below their starting prices.

For Indian companies, “easy money will no longer be available, in turn impacting future fund-raising,” said Rupen Rajguru, head of equity investment and strategy at Julius Baer Wealth Advisors India. The country’s firms got nearly $18 billion from more than 110 offerings in 2021, a record year that witnessed the trading debuts of technology-driven unicorns such as online food delivery platform Zomato, beauty retailing startup Nykaa and digital payments firm Paytm.

Authorities are taking many steps to bolster the prospects of Life Insurance Corp. of India’s mega IPO this quarter, even as the outlook worsens. Prime Minister Narendra Modi’s government even has the offering — which could raise between Rs 40,000 crore ($5.4 billion) and Rs 1 trillion this quarter — as a key item in its economic agenda.