BSE SME IPO index bleeds 4% in an overall bullish market post Sebi warning

economictimes.indiatimes.com:

Nifty hit a fresh record high.

The pessimism in the SME market comes after Sebi issued a warning to investors against blindly investing in SME stocks, where promoters of some companies paint an unrealistic picture of their operations.

The regulator said it has found that SME companies and their promoters have been resorting to certain means that project an unrealistic picture of their operations.

Urging investors to be careful and watchful of the aforesaid patterns and exercise caution while investing in SME stocks, Sebi said one should not rely on unverified social media posts and not invest based on tips and rumours.

Resourceful Automobile, which was trading with a GMP of nearly 90% to the issue price bore the brunt of the warning as the stock listed flat earlier today.

Also Read: FOMO, retail rush and Sebi warnings! What's actually happening in SME IPO market

Developed as an alternative source of raising funds for emerging businesses, the SME platform of stock exchanges has seen fundraising worth more than Rs 14,000 crore in the last decade, out of which Rs 6,000 crore was raised during FY24.

SME IPOs are being fancied on Dalal Street by both small and HNI investors as many of them have given multibagger returns in the recent past. Some SME stocks even doubled on listing day itself till the NSE imposed a cap of 90% recently.

Analysts too have cautioned that IPOs of SMEs without any track record and sound financials are getting oversubscribed many times, driven by retail investors chasing listing gains.