IPO slump: Stock market indices flashing red shouldn’t stop public offers

Subscribe to enjoy similar stories. Late in August, when the stock market’s bull run was close to its peak, the initial public offer (IPO) of a two-wheeler dealer with a handful of employees managed to attract bids worth 400 times the amount of capital it sought to raise. That was the level of enthusiasm back then among investors, who were willing to pour big bucks into just about any business going public.

Cut to 2025 and that boom seems like a distant memory, with the rush of companies hitting the capital market thinning out amid a secondary market sell-off. Take these Prime Database figures, as reported. In September, India’s primary market saw as many as 12 IPOs.

Last month, this number had shrunk to just three. Other months—barring December—after Indian indices peaked on 26 September also had low IPO counts, although the sums raised form a jagged pattern. It is almost as if stock-price tickers flashing red have been taken as a ‘stop’ sign.

According to Prime Database, more than two dozen companies that got IPO approvals from the Securities and Exchange Board of India between April and December are yet to go ahead; some of them now face the risk of letting the one-year validity of Sebi’s nod expire. Together, they planned to raise ₹42,390 crore, but seem to have had second thoughts. Investors at large having turned wary of share purchases is easy to assume.

The Sensex and Nifty, our key benchmarks, are down about 13% from their peak, while midcap and smallcap indices have lost about a fifth of their value. The declines are deeper in stocks that are not included in such composite price indicators. What led to this sell-off? Foreign investors pulled out in droves, perhaps aware that prices had overshot earnings and the