Has NSE's 90% cap killed SME IPO buzz?

'The frenzied first-day pop that attracted investors to new share issues of small businesses last year has settled to what market experts are calling a healthy pattern devoid of speculative runs.

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As of June last year, the average monthly listing-day gains of small and medium enterprise (SME) stocks were at 95%.

To curb extreme volatility and manipulation in SME initial public offerings (IPOs), the National Stock Exchange (NSE) introduced a ceiling of 90% on orders for SME shares placed before market hours.

This cap, meant to protect retail investors from sharp listing-day swings while ensuring fair valuations, kicked in from 4 July 2024. The gains not only shrank but slipped into the red between February and April 2025, coinciding with the volatility in the broader market fuelled by foreign investor selloffs and US's reciprocal tariffs.

Since May, though, the trend has steadied-the average listing gain of SME IPOs inched up from 8.25% in May to 12.53% in June and 19.58% in July before easing to 11.90% in August, show data from Prime Database Group.