Indian Retail Investors and Initial Public Offers: Pre and Post Covid Analysis

Abstract

Going public is one of the most popular forms of raising funds for expansion and growth of business. Since the liberalisation of economy in 1991, more than 1500 companies have listed themselves on the exchange. And the Indian stock markets keep expanding with increasing number of public offers in both mainstream and SME category. This paper compares the IPOs of Indian markets in broadly two phases-pre covid and post covid. A sample of 242 listings across eleven years from 2010-2020 are considered for the study. A comparison based on details of listing, listing gains etc reveal a more active retail investor segment. Overoptimism and urge to synthesise short term gains contribute to such gains. This is further backed by analysis of search results in the Indian region using google trends. Tail events such as covid-19 alter the way Indian investors behave and invest in IPOs and make their investments more on basis of speculative measures such as grey market premium, than actual fundamentals of the issue under consideration.

Mental Accounting and Loss Aversion on Indonesia Firm’s Performance During Covid-19

“…This may be because investors are still very careful when making their investments, as revealed by Riaz et al (2020) which exa-mines market behavior in Pakistan, where they become more cautious in investing considering that Pakistani investors have a behavioral character to want to increase their wealth immediately, avoid risk, fear losses and always expect income from companies and dividends. This is in line with research in India by Surana (2021) which examines how investors behave in the retail sector before and after the crisis due to the COVID-19 pandemic, where the behavior of investors in India is more cautious by investing more in companies that have just IPOs and making their investment decisions based on speculative measures rather than fundamentals. actual problem under consideration.…”