Grading of IPO's in Indian Capital Market: An Analysis of Market Performance

SEBI has made IPO's in India to be mandatorily graded from May 2007 under Sections 11 and 11A of the SEBI Act, 1992 as an initiative to provide the investors with a parameter on the fundamentals of the company which is easily understandable to them. This initiative of Indian capital market regulator had been a topic of arguable discussion amongst the researchers and academicians all over the world because of its unique concept. This paper is an attempt to investigate for the relevance of grading as it has already completed 5 years as a mandate for IPO's and performance can be easily justified. First section gives the introduction, the second section provides review of literature, third section describes the data and methodology used to appraise the relevance of grading in investors decision, the fourth section contains the results of the study and the final section gives the conclusions and future directions.