The opening price of shares listed under the small and midsize enterprise (SME) category will be capped, the National Stock Exchange (NSE) announced in a circular on Thursday, July 4.
According to the NSE circular, which will take effect immediately, the opening price of shares listed under the SME segment may only be "up to 90 per cent over the issue price."
In order to ensure uniformity in the opening price discovery and equilibrium price for SME platform IPOs across exchanges, an overall cap of up to 90 per cent over the issue price has been decided upon for SME IPOs, according to the circular.
Price control cap on SME segment
The 90 per cent price control cap will only apply to the SME segment, according to NSE clarification, and "not for mainboard IPOs." It also stated that "the circular will come into force with immediate effect, i.e., July 4, 2024."
The NSE has unambiguously set an upper limit on the opening price of shares on its NSE Emerge platform, which is used for SME listings, in an effort to allay fears.
The announcement of the circular happened to coincide with the listing of two SME IPOs this week at a bumper premium. Shivalic Power Control made a splash earlier on July 1 when the company's shares were listed at Rs 311 apiece, a 211 per cent premium.
Divine Power Energy made a spectacular debut on July 2, when its shares were listed at a premium of more than 287 per cent, at Rs 155.
SEBI's previous observation
There are certain patterns that we have observed, including price manipulation. Madhabi Puri Buch, the chairperson of the Securities and Exchange Board of India (SEBI), had previously stated that "the market has advised us on what to do to identify such cases and deal with them."
To comprehend and analyze the data, SEBI is still collaborating with advisors. "Both during the IPO and in the years that follow, manipulation is simple. She had stated that "some additional disclosure regarding risk factors is required."
