Marketing strategy and its influence on listing Price with reference to Indian IPO capital market

This study attempts to provide new evidence on the first-day IPO market performance using a set of 235 IPOs newly listed between 1 April 1997 and 31 March 2008 on Indian stock exchanges. The study examines how a change in the institutional arrangements that govern the pricing of IPOs, from the traditional fixed price approach to the building of a book, affects the level of under pricing. It also extends the literature on under pricing by comparing under pricing under the two pricing methods. The study adds new evidence to the existing literature on IPOs in a significant manner. Firstly, in consistence with the 'hot issue markets' theory (Ibbotson and Jaffe, 1975; Ritter, 1984), it highlights that on the main board of the Indian Exchange, IPO under pricing increased in 2007. The empirical findings indicate a significant mean positive under pricing (14.45 %); nonetheless, 60% of IPOs in the sample are initially overpriced. Secondly, in contrast with Giudici and Paleari (1999), the study finds no evidence that there is difference in under pricing between fixed price and book built offers. Keywords: India, Under pricing, Price Support, Initial Public Offering, Indian Stock Exchange, Book Building, Fixed Price Offering.