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Hyundai Motor India’s Rs 27,870 crore IPO – India’s largest ever – has highlighted the performance of mega-deals in domestic markets and their impact across markets. An analysis by Bloomberg shows that large offers tend to weigh on the performance of all markets. For example, the benchmark Nifty 50 index was down 3% a month after the Rs 20,557 crore IPO of state-owned Life Insurance Corporation of India (LIC).
Similarly, the index collapsed by 5% after Paytm’s Rs 18,300 crore IPO in November 2021, the largest at that time. Experts attribute this phenomenon to the fact that large IPOs absorb market liquidity, thereby weighing on overall market performance. Additionally, the post-listing performance of most large IPOs has been disappointing. Hyundai’s gray market premium suggests a listing price close to its issue price, which could indicate a tepid start.
First publication: October 15, 2024 | 11:06 p.m. STI