As many as four out of a total six companies that debuted on the Indian stock markets this year are trading below their issue price, an analysis shows.
Among the new listings this year, state-run National Buildings Construction Corporation (NBCC) is the biggest loser with the stock currently trading 18.86% below its issue price of Rs 106 per share. NBCC is followed by Olympic Cards which lost 3.33% from its issue price of Rs 30.
Shares of commodity exchange MCX at present trade 2.82% below its issue price of Rs 1,032 per share. Even the recently listed Tribhovandas Bhimji Zaveri is down, albeit marginally (0.2%) over its issue price of Rs 120.
Meanwhile, the only two companies which have given decent returns to IPO investors are tutorial firm MT Educare (14.18%) and BCB Finance (0.20%).
According to market participants, most companies listed during the year are trading way below their issue price because of weak stock market and sluggish investor confidence.
"Investors are nervous and not very enthuse about the IPO market. Moreover, they have stopped participating in the secondary market due to high volatility in the stock market," an expert said.
Market experts have blamed poor market conditions behind the weak show by these newly listed companies on the bourses.
With shares of most companies listed this year slipping below their issue prices and two initial public offerings (IPOs) already withdrawn, the scenario has remained challenging for the primary market.
There seems no end to the sell-off that started in February after a smart rally in January. The BSE benchmark index Sensex gained 10.79% in January alone, but since February till May 11, the barometer has lost 5.82%.
Weak market conditions forced auto parts maker Samvardhana Motherson Finance Ltd (SMFL) to defer its Rs 1,665 crore initial share sale, that remained under-subscribed on the last day of its issue.
Earlier in January, Goodwill Hospital had to pull out its offering due to poor response. The issue was heavily under-subscribed during its IPO period.
