New Delhi: The SME IPO market in India saw a sharp surge in activity during the financial year 2023-24 (FY 2023-24) and FY 2024-25, supported by strong retail participation and favourable market sentiment, the latest Reserve Bank of India (RBI) October Bulletin has said. 

Small and medium enterprises had raised Rs 5,917.19 crore in FY24, to which Rs 5,660.93 crore (94.80 per cent) was raised issuing fresh shares and Rs 310.26 crore (5.19 per cent) through offer for sale (OFS).

The numbers soared significantly in FY25, with SMEs raising Rs 9,110.97 crore. Fresh issues (Rs 8,344.37 crore) contributed 91.5 per cent, while the OFS part was Rs 775.6 crore or 8.5 per cent.

Most of the SME IPOs, during this period, recorded high oversubscription levels and listing gains.

According to the Bulletin, Macroeconomic and policy factors like overall market buoyancy and advancement in payment and settlement mechanisms in the IPO market drove this boom.

The SME firms used most of the raised funds for capital enhancement or working capital. However, despite robust listing gains, post-listing performances of these SME stocks reveal both opportunities and risks for the investors.

“While the buzz around SME IPOs may seem exciting, investing solely on market sentiment can be risky. During bullish phases in the market, enthusiasm and investors’ appetite may cause investors to overlook due diligence. In this phase, demand for IPOs surges, and expectations of substantial listing gains can lead to inflated valuations,” the Bulletin said.

However, market reversals can quickly dampen this optimism. SME IPOs may offer impressive gains in favourable conditions but carry higher volatility and risk during downturns, making due diligence indispensable.

Investors should carefully evaluate the company’s fundamentals, growth prospects, and risk factors before committing capital, the bulletin suggested.

Meanwhile, given the strong growth of start-ups in India, most of which have innovative business models, the provision of risk capital for these firms becomes crucial.

Keeping in view the spurt of SME IPOs in recent months and the associated challenges from the perspective of investor protection, SEBI, in consultation with NSE, BSE and merchant bankers, had initiated the review of the IPO framework for the SME segment.

These measures aim to reduce information asymmetry and regulatory arbitrage, ensure proper utilisation of IPO proceeds, prevent market manipulation, and protect retail investors, the bulletin noted.

Diwali Muhurat Trading 2025 Time Live Updates: The special one-hour Muhurat trading session on both the BSE and the NSE will take place between 1:45 pm and 2:45 pm on October 21, with a pre-opening session from 1:30 pm to 1:45 pm, as per exchange notifications. The new session also ushers in Vikram Samvat 2082, the Hindu New Year that begins on Diwali. Traditionally, trading during the ‘Muhurat’ session, the auspicious hour, is believed to bring prosperity and financial growth to investors.

According to official schedules, all trades executed during the Muhurat session will carry regular settlement obligations, meaning delivery and payment duties for buyers and sellers will be settled as on any normal trading day.

V K Vijayakumar, chief investment strategist at Geojit Investments Ltd, said, “The important takeaway from Samvat 2081 is India’s huge underperformance. Even though there are many reasons, including Trump tariffs, for this underperformance, the single major factor is the sharp decline in India’s earnings growth to 5 per cent in FY25 from average 24 per cent during the three years before that. Since ‘in the long run, the market is a slave of earnings’ the major trend, going forward, will depend on how earnings growth pans out. The fiscal and monetary reforms implemented this year has started showing results.”

Particularly, the sales of automobiles and white goods have shot up early this festive season and, if this trend sustains, earnings growth will be good at around 8 per cent to 10 per cent in FY 26, accelerating to around 15 per cent in FY27. If this expectation materialises, the market will rally in Samvat 2082 compensating for the underperformance of Samvat 2081. In the short run the market may get a leg up from a possible India- US trade deal, but the long-term trend will be dictated by earnings growth, he added.

Muhurat trading is a long-standing Diwali tradition first introduced by the Bombay Stock Exchange (BSE) in 1957, and later adopted by the National Stock Exchange (NSE) in 1992.

Historically, brokers performed Chopda Pujan, a ritualistic worship of account books, during this auspicious hour to mark the beginning of the new financial year with prosperity and good fortune.

Technical View

Rupak De, senior technical analyst at LKP Securities, said, “The market started with a gap-up (in the previous session on Monday) and remained volatile throughout the day. On the higher end, Nifty touched a high of 25,926 before closing around 25,850. Though there was some profit-taking at higher levels, the overall sentiment is likely to remain strong, with the potential to reach 26,000-26,200 in the short term. The technical setup remains positive as long as the index stays above 25,700, below which it may move back into consolidation.”