Nithin Kamath notes that while the broader stock market faces selling pressure, recent IPOs are bucking the trend. With nearly 70% of new listings trading above their issue prices, investors should watch for potential risks if this disconnect between new and existing stocks continues.
Indian equity markets are currently showing a clear split between how recent IPOs perform and how the broader market is behaving. Nithin Kamath, the CEO of Zerodha, recently pointed out that this gap is historically rare. While investors have been selling stocks in the secondary market—where shares are traded daily—the primary market for new IPOs has remained surprisingly strong.
Between October 2025 and September 2026, 125 companies listed on the mainboard. The data shows that 67.2% of these companies are still trading above their original issue price as of early October 2026. This group of recent listings delivered a median return of 24.7%. This performance stands in sharp contrast to the previous year, specifically between October 2024 and September 2025, when fewer than half of the IPOs were trading above their issue price, and the median return was negative 9.4%.
Kamath described the current IPO activity as a active period, noting that liquidity is flowing into new stocks even as the overall market sentiment remains bearish. In simple terms, while the Nifty 50 and other major indices have struggled and remained well below their peaks, investors have continued to bet on new company listings with enthusiasm.
However, this situation raises concerns about sustainability. When a large gap exists between the performance of new stocks and the overall market, it can indicate that the IPO segment has become overheated. Analysts often refer to this as froth, meaning prices might be higher than the underlying business fundamentals justify. If the broader market continues to face pressure from global factors or local economic headwinds, this enthusiasm for IPOs may not last, potentially leading to a correction in these newer stocks.
For investors, the key monitorable is whether this trend can continue. It is important to remember that IPOs are often priced based on current sentiment rather than long-term value. Investors may track whether the companies launching these IPOs maintain their growth and profitability in the coming quarters, as any dip in their performance could cause their stock prices to fall more sharply than established companies in the secondary market.