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The exchange at the heart of India's stock market made a modest debut of its own. The National Stock Exchange (NSE) listed on the BSE at ₹1,800 a share on Thursday, a 0.84% premium to its ₹1,785 issue price, and ended the session about 1.8% above the offer price, even as the Sensex fell 1.67%. For investors in India's second-largest initial public offering (IPO), the gain offered some comfort on a bruising market day. But it also underscored a familiar lesson from mega-IPOs: a large offering and a prominent business do not necessarily translate into a blockbuster debut. A Mint analysis of India's 20 largest IPOs, including NSE, shows a mixed record. Several offerings overcame broader market weakness to deliver strong first-day gains. Others disappointed despite heavy subscriptions, while debut-day winners have not always sustained their advantage. NSE’s closing gain placed it near the bottom of the positive debuts in the sample. Of the 13 offerings that ended their first session above their issue prices, only Tata Capital posted a smaller gain, at 1.3%, according to Prime Database. Demand meets supply NSE's ₹22,562-crore offering, subscribed 5.71 times, trails only Hyundai Motor India in size. Its modest debut reflected competing forces: demand for a distinctive market-infrastructure business and selling by existing shareholders sitting on gains, according to analysts. Aman Chowhan, senior fund manager, research and investment, at Abakkus Investment Managers, attributed the limited listing gains to NSE’s large free float and profit-booking by existing shareholders. The resulting supply was sufficient to absorb fresh institutional demand, he said. Santosh Meena, head of research at Swastika Investmart, pointed to the factors supporting demand: strong fundamentals, a distinctive franchise, reasonable valuation and institutional participation. NSE’s position in equities and derivatives, high margins and exposure to the expansion of India’s capital markets supported its appeal, Meena said. He also cited pricing below earlier unlisted-market peaks and subscription of 12.68 times in the qualified institutional buyer category, while cautioning that these strengths need not translate into large immediate gains. Defying a falling market The record of mega-IPOs, including NSE's, shows that a falling market doesn’t really lead to a weak debut. Of the 13 offerings listed on days when the Sensex declined, eight closed above their issue price while five finished below. “A falling Sensex sets the opening tone, but a large IPO’s close depends on institutional appetite for the business, pricing that leaves room for gains, and whether shareholders are long-term investors or leveraged buyers seeking a quick exit. When these align, market mood matters less,” said Tanvi Kanchan, associate director, Anand Rathi Shares & Stock Brokers Ltd. Some comfortably overcame the selling pressure. LG Electronics India surged 48.2% on debut despite a 0.4% Sensex decline. Swiggy gained 16.9% as the benchmark fell 1.3%, while HDB Financial Services rose 13.6% against a 0.3% market drop. Others suffered steep losses alongside a falling benchmark. Paytm parent One 97 Communications fell 27.2% on its first day, Reliance Power lost 17.2% and Hyundai declined 7.1%. “A large IPO can withstand a weak market when investors are buying something they can't get elsewhere, at a price that leaves room for appreciation. The factors that matter are scarcity, pricing relative to listed peers, the quality of the institutional book, and how much supply hits the market on day one,” said Thomas J. Priju, portfolio manager at Karma Capital. The subscription trap Subscription figures were similarly not a reliable guide to debut-day performance. Seven of the previous offerings attracted double-digit subscriptions, but only five delivered first-day gains. Reliance Power was subscribed 69.6 times and still ended sharply lower. SBI Cards, subscribed 19.1 times, also closed below its issue price. Chowhan said headline subscription figures can overstate underlying demand because investors inflate bids in anticipation of smaller allotments. What matters is genuine demand and the price at which it exists, he said, arguing that investors should give greater weight to offer valuation than to the overall subscription multiple. “Headline subscription indicates that demand exceeded supply. It doesn't tell you at what price investors want to hold the stock after listing. Leveraged HNI (high net worth individual) bids and inflated applications can make the number look far stronger than real conviction,” Priju said. Beyond the debut Beyond the listing day, the record offers less comfort. As of 24 September, only seven of the 19 mega-IPOs (excluding NSE) traded above their offer prices; the remaining 12 are below. These returns span different holding periods because the companies listed at different times. Swiggy and Hexaware, despite positive debuts, are down 31.3% and 29.5%, respectively, from their issue prices. Hyundai moved the other way, recovering from its first-day loss to trade 5.2% above its offer price.
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