The underlying wave of optimism that seeped through Indian equities in recent months helped broader indices erase their year-to-date losses and turn green for 2025, even as unsettling events such as the Pahalgam terror attacks, Operation Sindoor and the ensuing India–Pakistan conflict rattled markets now and then.
Yet this buoyancy masked a growing divide. While broader market stocks, including the newly listed ones saw buying interest in recent times, the enthusiasm for market entrants wasn’t strong enough to lift them out of the red year-to-date. This reflects a far cry from last year’s IPO euphoria.
As 2025 dawned under the shadow of lofty valuations, slowing corporate earnings growth and a cooling GDP outlook, investors quietly shifted their bets away from recent market debutants.
That caution has shown up in both primary‑market activity and on the bourses. The BSE IPO Index which tracks companies within their first year of listing, has plunged almost 13% so far this year. By contrast, the broader BSE 500 is up around 2%, and the blue-chip Sensex has climbed nearly 5% year‑to‑date.
Last year’s blockbuster IPO season, which saw multiple deals north of $100-mn, has given way to a trickle of offerings. Sluggish investor sentiment and uncertain global economic situations emerge as the major factors eating away sentiment for public offers in 2025.
Meanwhile, as concerns over a global economic flare up due to Trump’s tariff policy keeps investors on edge, most are preferring to go the safe-haven ‘gold’ way or choosing to reallocate funds towards more stable large-cap names.
On the other hand, investors are also turning wary of the high valuations that were achieved by recently listed companies due to a period of IPO frenzy in 2024. To that effect, as the slew of lock-in expiry for pre-IPO shareholders kick in, several early backers are eyeing the exits.
As lock‑in periods expire, many pre‑IPO shareholders are cashing in on frothy valuations, piling further selling pressure onto these. In May alone, roughly 20 companies will see pre‑listing lock‑ins lift, potentially unlocking $14.7-bn worth of shares, according to Nuvama Institutional Equities. And between 30 April and 28 July, that tally swells to 58 firms and $26 billion of eligible shares, the report added.
However, it's worth noting that this figure reflects the total value of shares becoming eligible for trade, but not necessarily those that will hit the market. A significant portion of these shares are held by promoters and affiliated entities, many of whom may choose to retain their stakes. Despite that though, the looming supply overhang is enough to keep newly listed stocks on the back foot.
On that account, while the market’s breathless rally powers ahead, it’s remains clear that the newly listed peers will need more than sentiment alone to catch up. Until investors regain confidence in valuations and growth prospects, recent entrants may continue to find themselves vulnerable of selling pressure.
