Can Hyundai IPO Listing Lead To Correction In The Share Market?

Hyundai is going to launch its IPO soon. The company already filled out its DRHP papers and waiting for approval. Amid the ongoing IPO process, analysts are trying to understand the possibilities of correction after Hyundai’s IPO listing. But why so? Why a debate about the correction or market fall is trending among the market leaders? The main reason is the history of the big IPO listings. We have seen every time a big IPO lists, it leads to a market fall after a month. Will the history repeat in the case of Hyundai as well?

Will Hyundai India IPO Listing Affect The Indian Stock Market?

Hyundai’s IPO is expected to get approval soon. However, the IPO is coming with a lot of doubts and discussions. As we all know, Hyundai India is a big car manufacturing company. It is currently the second big market player. Hyundai India is going to raise around Rs. 25,000 Crores or $3 Billion from its IPO, which is a huge amount. The company is selling its 17.5% stake in total. So with this huge amount, can Hyundai India’s IPO disturb the market’s equilibrium? Before giving it an answer, let us have the context behind this debate below.

The Indian market has had several big listings since 2008. It includes listings of Indian companies like Reliance Power, LIC, Coal India, Paytm, and Nykaa. If we look at the market after their listings, we will see some unexpected falls in the market. At the time of listing of Reliance Power, the listings created a lot of hype about the share. The market witnessed a fall of 3.1% one month after its listing. If we look at the listing of Coal India in 2010, the Sensex fell by 4.4% in one month. Other examples are the Paytm listing in 2021, which led to a fall in the market by 6.4% in a month and the LIC listing in 2022 which led to a fall in Sensex by 5.4%.

There are a lot of reasons that impact the market after a big IPO’s listing. One of these reasons are black swan events that took place after the listing of SBI Cards. It was the COVID-19 time when the global and Indian equity markets sank. According to Kranthi Bhatini, Director at WealthMills Securities, the market will not face a similar situation this time. Hyundai India can be an exception in this case because the times have changed. The country has surplus cash with DII and FII investments and a strong SIP system of $2 Billion monthly. Hence, it will be sufficient to handle any possible crash this time.