India’s primary market continued to witness an unprecedented surge in IPO activity in calendar year 2025, with around 120 IPOs launched in the mainboard segment. Mainboard IPOs typically comprise relatively large and established companies that list on the BSE or NSE.
During such IPO frenzies, one behavioural bias that gets amplified is FOMO (Fear of Missing Out). Promoters often capitalise on buoyant market sentiment to raise capital at elevated valuations. The result is peak optimism, expensive pricing, distorted price discovery – and ultimately, investors bearing the brunt.
A year-end review of these IPOs paints a sobering picture. More than half, around 58 per cent, were trading below their issue price as of 31 December 2025. The fate of SME IPOs tells a similar tale, where information is limited, regulatory requirements low and volatility is high.
What should investors learn from this?
Quality and fundamentals matter, yet they are frequently ignored during IPO booms. Investors tend to focus more on participation than selection. An IPO is similar to a lottery – one may get lucky or unlucky. Hype and excitement do not automatically translate into sound investment opportunities.
How should retail investors approach the IPO bandwagon?
The answer is patience – arguably the hardest but most reliable investing virtue.
The best time to evaluate a company is often after it lists. Waiting for a few quarters of financial results provides better visibility into execution, governance, and sustainability of the business model. This may require sitting on the sidelines while others appear to be making quick gains – but discipline pays over time.
IPO outcomes are heavily influenced by timing, sentiment, and luck – factors beyond an investor’s control. Not every IPO is worth chasing, even if heavily oversubscribed.
For investors who still wish to participate to satisfy the “quick-money” itch, a prudent approach would be to:
- Take calculated risks without going overboard.
- Be prepared for losses and willing to exit if the stock lists at a discount.
- Treat IPO investments as part of a satellite portfolio, not the core meant for long-term wealth creation.
Remember, long-term wealth is built after listing, not on listing day.