IPO frenzy can dent secondary market liquidity, cap market upside: Analysts

The US Federal Reserve's taper plans and a brisk economic recovery may also prompt the Reserve Bank of India (RBI) to begin winding up ultra-loose policy regime

After staying away from a handful of initial public offers (IPOs), investors are flocking the primary markets again for listing pop. This primary market frenzy, analysts say, could veer the liquidity wave away from the secondary market, which may cap its upside – at least in the near-term.

“Equity supply in the second half of the current fiscal (H2-FY22) could be around 1.5 times seen in H1-FY22, which could cap the near-term upside, particularly if foreign portfolio investor (FPI) flows were not to substantially pick-up,” wrote Mahesh Nandurkar, managing director at Jefferies in a coauthored report with Abhinav Sinha.

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