NSE caps listing gains in SME IPOs; ‘move to curb price swings’
Stock Exchange (NSE) on Thursday said it will impose a cap of 90% on the issue price of SME IPOs during the pre-open session on listing day. The move is aimed to bring stability to the opening price discovery of these stocks.
As of now, there is no cap for SME IPOs on the listing day.
About 41 IPOs this year listed between 90% and 400% above the issue price due to factors like hype or short supply of shares.
On May 14, Winsol Engineering listed at ₹383, a premium of 411% over its offer price of ₹75.
Analyst said the cap can help moderate such price swings. «The new rule can potentially reduce volatility and speculation in the opening price of SME stocks,» said Amit Goel, co-founder, Pace360. "Investors who aim to buy IPO shares and then quickly resell them at a high opening price might find it more challenging with the new cap. Because the opening price is now restricted to 90% above the issue price, the potential for immediate high profits is reduced."
The new norm will come into force with immediate effect, NSE said.
Earlier this year, Sebi chairperson Madhabi Puri Buch had raised concerns about the SME segment after the regulator observed signs of manipulation. Sources said, it has come to the notice of Sebi that, post listing, some of the SME companies and their promoters have been resorting to certain means that project an unrealistic picture of their operations.
Such companies have been seen to make public announcements that create a positive picture of their operations. These announcements are
