INITIAL LISTING PERFORMANCE OF IPO LISTED ON NSE

Abstract

One of the finest form of raising capital for any company is by selling its’ shares in the capital market and it is generally done by going public and raising initial public offerings (IPOs). The IPOs are generally sold to public at a price which is significantly lesser than the first day trading price, thereby leading to underpricing which at times becomes a costly affair for the companies. The pricing of the IPOs is of significant importance in majority or almost all equity markets. This has ultimately led to researches on the short and long run performance of the IPOs. The market anomaly so caused by the IPOs comes not only with high returns but also with the high risk prevailing in them. The major types of market anomalies with respect to IPOs are underpricing, hot issue markets and long run performance. It has been found that there is significant amount of underpricing in the Indian primary market and consequently a substantial initial return in the secondary market.