IPO Fever, But Underlying Losses Deepen
India’s mainboard and SME IPOs shattered fundraising and listing records in 2024-25. According to the SEBI Annual Report 2024-25, public equity monetisation, including initial public offers (IPOs), follow-on public offers (FPOs), and rights issues, raised about Rs. 2.1 lakh crore, an increase of 2.5 times from the previous year. Strong retail participation, despite geopolitical uncertainties, FPI outflows, and domestic market volatility, has driven this growth.
However, it is easy to headline the IPO records and throw around numbers. But beneath this surface lies a growing financial schizophrenia for the Indian household.
While IPO subscriptions and retail participation soared, SEBI’s concurrent studies found that a vast majority of Indian households are directly exposed to risk patterns they do not fully comprehend.
Most new-generation investors, hyped by digital brokers and social media frenzy, jumped into market-linked products without meaningful buffers or understanding of proper risk management.
Almost 47 IPOs in the past year have slipped below their issue price. Clearly, not everyone is taking home the treasure trove.
False Security: IPO Access ≠ Wealth Creation
A dominant new myth is that democratized IPO access guarantees wealth creation. But the cycle of initial listing gains is highly uneven. Many who entered with the 2024-25 IPO “goat-herd” now face whiplash as sentiment turns and corrections bite. Many IPOs have been aggressively priced, leading to overvaluation based on future growth expectations rather than current earnings. When market sentiment shifts or fundamentals don’t live up to the hype, prices often fall to more realistic levels.
The Common Household Scenario
Fresh savers, having abandoned safe deposits for the promise of high returns in the public market, are among the first to panic and exit or, worse, double down on leveraged bets, increasing their vulnerabilities. The illusion of easy profits, stoked by family/friend networks and “finfluencers,” is leaving a legacy of overconfidence and financial fragility.
SME IPOs: New Regulatory Walls Signal Deeper Risks
SEBI’s abrupt tightening of SME IPO regulations in 2025 sent a telling signal: fraud risks and capital misuse were rising, particularly in low-regulatory oversight market segments. New rules doubled the minimum application size to Rs. 2 lakh, requiring individual investors to apply for a minimum of 2 lots worth over Rs. 2 lakh each.
This effectively bans smaller retail investors from such high-risk bets and encourages more informed and serious investors. This is a rare regulatory admission that democratized market access isn’t always in the interest of household stability, especially where financial literacy is low.
Paradox of Household Shock Absorbers in 2025
Despite breakthrough mobilisation in equity and mutual fund products, household shock absorbers haven’t kept pace. India’s household insurance and pension coverage is still shallow. Traditional savings like FDs and gold once provided automatic liquidity and low-volatility buffers. The new landscape leaves families more exposed to market swings, especially since a typical middle-class household’s “margin of error” is slim: salary growth is thinning, job security is cloudier, and inflation still pinches at real disposable income.
Behavioural Shifts: Market ‘Risk Culture’ Outpaces Reality
In the past, retail bank deposits served as circuit breakers for household finances during crises. Now, risk culture among households is outpacing risk capacity. With more Indians relying on market returns for future goals, a downturn could now cut deeper and recover more slowly than in the old deposit-driven days.
Implications Going Forward
- Wealth-building models are migrating faster than shock-absorber systems can adapt, increasing the average household’s risk appetite but not their resilience to downturns.
- SEBI’s focus is subtly shifting from ‘inclusion at any cost’ to ‘inclusion with absorption capacity,’ as seen in the SME IPO reforms and curbs on retail participation.
- Regulatory messaging is more public than ever: new market entrants are being bluntly warned by SEBI itself that unhedged speculation is not a sustainable path. Indeed, professional traders, not first-time investors, are the consistent winners in risky segments.
- Financial content creators and the advisory ecosystem face a new responsibility: to reframe aspiration investing from “how quickly can you win?” to “how quickly can you lose?”
In essence, the IPO boom signals both maturity and an urgent growing pain: India’s new investor class needs not just aspirations, but active maintenance of financial shock absorbers, or both market and household instability could escalate the minute confidence breaks.