Retail IPO frenzy: Govt says regulation not needed, calls for better investor awareness

With retail investors lining up for initial public offerings in a big way, the government and regulators remain watchful but do not see the need for additional regulation.

“There may be a need for educating and creating more awareness amongst retail investors, but we cannot be regulating people in trading,” noted a source, while pointing out that there has been a lot of focus on interest from retail investors in IPOs, especially regarding allotments and first-day trading.

Underlining that retail investors have to take a call on when to invest and trade—and that some IPOs can lead to losses while others may result in gains—sources added that, on average, people should stay invested in equities for the long term as it can help yield inflation-beating returns.

However, if everyone remained invested for the long term, there would no longer be day trading or liquidity in the market. “Both of these are needed,” said the source.

India now has 13.6 crore investors and 21 crore demat accounts, and about one lakh demat accounts are opened every day, SEBI Chairman Tuhin Kanta Pandey had said recently.

With a large number of IPOs hitting Dalal Street and many more in the pipeline, millions of retail investors have been betting big on them and investing. For instance, several large IPOs—including those of LG Electronics India and Tata Capital, which debuted in October, and Lenskart in November this year—have attracted strong retail interest. An estimated Rs 1.1 lakh crore has been raised through IPOs this fiscal, as per estimates.