The Securities and Exchange Board of India (Sebi) is conducting a comprehensive review of key market regulations to enhance efficiency and investor protection, even as ₹2.45 lakh crore worth of IPOs face significant headwinds from weak market sentiments. According to The Hindu BusinessLine, the subdued secondary market conditions and possible economic slowdown have cast a gloom on these IPOs that have received Sebi approval to raise growth capital. The IPO markets have been in doldrums for the last few months, with just one public offer hitting the market last month - Bagmane REIT raised ₹3,405 crore in May, while the IPO of OnEMI Technology Solutions opened for subscription in April-end and closed on May 5 to mop-up ₹926 crore. Interestingly, of the 20 IPOs that have hit the market so far this year, only 3 are trading below their issue price. Among the large issues waiting for market sentiments to improve include Avaada Electro (₹9,000 crore), SAEL Industries (₹4,575 crore), Hero Fincorp (₹3,600 crore) and Continuum Green Energy (₹3,650 crore). In all, there are 163 companies waiting to raise ₹2.45 lakh crore, according to data sourced from PRIME Database.
The Securities and Exchange Board of India (Sebi) is conducting a comprehensive review of key market regulations to enhance efficiency and investor protection. According to reports from Business Standard, Sebi Chairman Tuhin Kanta Pandey announced these developments at the ICICI Securities India Investor Conference 2026. The regulator is examining changes to ensure capital requirements for brokers better reflect their operational scale and risk profile, as part of efforts to make India's capital markets more efficient and investor-friendly. Speaking at the conference, Pandey emphasized that 'Reduce friction. Improve clarity. And enable growth — without diluting safeguards' is the objective across these reforms. As per Moneycontrol, Pandey outlined that the regulator is currently reviewing the framework for variable net-worth requirements for stockbrokers so that capital requirements better reflect operational scale and risk. The comprehensive review now covers stockbrokers, listing norms, portfolio management services (PMS), research analysts and other market intermediaries as India's capital markets continue to expand rapidly.
Sebi is studying improvements to the pre-open call auction mechanism for initial public offerings (IPOs) and relisted securities to enable more stable and efficient market openings. As reported by Business Standard, the regulator is examining measures to improve price discovery, particularly through this mechanism. The framework aims to provide more stable pricing for IPOs and relisted securities during market openings, with the objective of ensuring more stable and efficient market openings for these securities. According to Moneycontrol, the regulator is examining improvements in price discovery through the pre-open call auction mechanism for initial public offerings (IPOs) and relisted securities to facilitate more stable and efficient market openings. The proposed changes include a new methodology for determining base prices for re-listed stocks and a more dynamic mechanism for widening price bands. Last month, the regulator suggested these comprehensive changes to the pre-open call auction process to ensure 'more stable and efficient market openings' for IPOs and relisted securities.
Sebi is considering extending the maximum 50% portfolio overlap rule currently applicable to active funds to index funds and exchange-traded funds (ETFs) to curb proliferation in the fast-growing passive mutual fund segment. According to industry sources, the proposed restriction may initially apply only to sectoral and thematic passive schemes, with another major category — smart-beta funds — facing limits on the number of schemes an asset management company can launch. As reported by Business Standard, the regulator is exploring similar guardrails for the passive segment and had sought feedback from the Association of Mutual Funds in India (Amfi). "These are some of the suggestions made by the industry. The regulator may, however, choose a different approach," said a senior mutual fund executive. The surge in passive fund launches has been dramatic, with the number of passive schemes increasing fivefold over the past six years to reach 740 schemes, accounting for nearly 40% of all MF schemes compared with just 8% in April 2020. Assets under management in passive products have grown ninefold since the pandemic to around ₹15 trillion. Industry executives are pushing back against the proposed overlap rule, with one senior AMC executive stating "Fifty percent is very aggressive. It will eliminate benchmark-plus products, which are a big source of revenue for ETF players."
Given the stress in the primary markets, Sebi in April extended validity of IPOs expiring in the first six months of this fiscal to September-end, allowing affected companies to launch their public issues without seeking the regulatory approval again. According to The Hindu BusinessLine, Vinod Nair, Head of Research at Geojit Investments, said the IPO market is unlikely to recover in the near term, as overall equity sentiment remains subdued. "Risks of potential downgrades in corporate earnings and economic growth continue to persist over the coming quarters. Additionally, elevated bond yields and ongoing inflationary pressure are weighing on equity valuations," he said. Rajesh Singla, CEO & Fund Manager at Alpha AMC, said a meaningful revival in the primary markets is possible over the next six to eight months if secondary markets continue to stabilize. However, he noted that a significant portion of large IPO book-building depends on foreign institutional participation, but the sustained FPI outflows of the past several months have made pricing and execution of large deals genuinely difficult. The next IPO cycle may not be as exciting as the previous one, but it is likely to be deeper, more institutional and more sustainable, according to Ratiraj Tibrewal, CEO of Choice Capital.
The regulatory push comes amid significant growth in India's financial markets, with household financial savings rising to 21.7% of GDP in FY25 from around 20% in FY23. According to The Hindu BusinessLine, the number of investors in the securities market has reached approximately 145 million, while mutual fund assets have grown from ₹12 lakh crore to over ₹80 lakh crore. Market capitalisation has increased from 69% of GDP a decade ago to around 128% today, reflecting the growing role of capital markets as a core avenue for household savings and wealth creation. As reported by Moneycontrol, equity issuances touched ₹4.5 trillion in FY26, while IPOs raised about ₹1.9 trillion through 366 issues. Corporate bond issuances exceeded ₹9 trillion during the year. The regulatory concerns were heightened by the concentration of launches in relatively narrow and higher-risk categories such as thematic and smart-beta funds, which were also attracting significant investor inflows. Since then, Sebi has rolled out several measures including the overlap rule, capped distributor commissions on switch transactions into NFOs, and mandated time-bound deployment of NFO collections to address incentives that encourage frequent product launches.
