The National Stock Exchange (NSE) has introduced a 90% cap on the opening price for IPOs on the NSE Emerge (SME) platform over their issue price, aiming to standardise price discovery and control excessive volatility.
What Happened: The NSE circular released on Thursday, July 4 states that the cap will not apply to mainboard IPOs, relisted securities or public Debt. The new rule is effective immediately.
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The decision to introduce a cap is seen as a measure to control excessive price volatility during the special pre-open session for SME IPOs. This cap will ensure that the opening price or equilibrium price does not exceed 90% over the issue price for SME IPOs.
The move comes after strong volatility of SME stocks which are witnessing record gains on the listing day itself.
On Monday, Shivalic Power was listed on the NSE SME at ₹311, a premium of 211% over its issue price of ₹100.
According to an Economic Times report, 43 out of 110 SME IPOs in the first six months of 2024 have given astronomical returns of up to 1,500%.
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