While the buzz around small and medium enterprises (SME) initial public offers (IPOs) may seem exciting, investing solely on market sentiment can be risky, cautioned a RBI study.

“During bullish phases in the market, enthusiasm and investors’ appetite may cause investors overlook due diligence.

“In this phase, demand for IPOs surge, and expectations of substantial listing gains can lead to inflated valuations. However, market reversals can quickly dampen this optimism,” said RBI officials in the study “Fundraising by Indian Small and Medium Enterprises through IPO: Recent Trends and Developments,” published in the latest monthly bulletin.

The officials -- Bhagyashree Chattopadhyay and Shromona Ganguly, emphasised that SME IPOs may offer impressive gains in favourable conditions bu

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