54% Of IPO Investors Sell Shares Within A Week: SEBI Study
Individual investors sold 50.2% of their allotted shares within the first week post-listing.
SEBI has shed light on the prevalent flipping behaviour among investors in the initial public offering market, revealing significant trends in how different investor categories handle their allotted shares.
A study by the market regulator, titled 'Analysis of Investor Behaviour in Initial Public Offerings,' which was undertaken by the Department of Economic and Policy Analysis, indicates that approximately 54% of IPO shares, in terms of value, were sold within a week of listing, with individual investors showing a pronounced tendency to exit quickly.
Individual investors sold 50.2% of their allotted shares within the first week after listing. Of these, non-institutional investors sold 63.3% of their shares by value, while retail investors sold 42.7% of their shares within the same timeframe.
The market regulator also identified a behavioural pattern it termed 'disposition effect' among investors. This means that investors have a greater inclination to exit IPOs that exhibit positive listing gains, as opposed to those showing a loss on listing.
Individual investors sold 67.6% of their shares by value within a week when returns exceeded 20%, compared to only 23.3% when returns were negative, the study revealed.
In contrast, mutual funds invest in IPO shares for a longer duration, selling only about 3.3% of the allotted value within a week. Banks, on the other hand, displayed a much shorter holding period, selling approximately 79.8% of their allotted shares within the same period.
Geographically, the study highlights that 39.3% of retail investors were from Gujarat, followed by Maharashtra with 13.5% and Rajasthan with 10.5%.
Additionally, the data reveals a surge in demat accounts opened during the post-Covid period, with almost half of the total allotted accounts for IPO applications being opened during the period.
