NSE caps listing gains in SME IPOs; ‘move to curb price swings’

About 41 IPOs this year listed between 90% and 400% above the issue price due to factors like hype or short supply of .

On May 14, Winsol Engineering listed at ₹383, a premium of 411% over its offer price of ₹75.

Analyst said the cap can help moderate such . "The new rule can potentially reduce and speculation in the opening price of SME stocks," said Amit Goel, co-founder, Pace360. " who aim to buy IPO shares and then quickly resell them at a high opening price might find it more challenging with the new cap. Because the opening price is now restricted to 90% above the issue price, the potential for immediate high profits is reduced."

The new norm will come into force with immediate effect, NSE said.

Earlier this year, chairperson Madhabi Puri Buch had raised concerns about the SME segment after the observed signs of manipulation. Sources said, it has come to the notice of Sebi that, post listing, some of the SME companies and their promoters have been resorting to certain means that project an unrealistic picture of their operations.

Such companies have been seen to make public announcements that create a positive picture of their operations. These announcements are typically followed up with various corporate actions such as bonus issues, stock splits and preferential allotments, sources said.

The above actions create a positive sentiment amongst investors, which induces them into purchasing such securities. Simultaneously, this also presents an easy opportunity to the promoters to off-load their holdings in such companies at elevated prices.

SEBI, in the recent past, has taken action on few companies listed on SME segment such as , , , and White Organics Agro.