Impact of Covid-19 Pandemic On Performance of Ipo's in India

International Journal of Management (IJM)
Volume 12, Issue 4, April 2021, pp.373-393, Article ID: IJM_12_04_033

Available online at https://iaeme.com/Home/issue/IJM?Volume=12&Issue=4
ISSN Print: 0976-6502 and ISSN Online: 0976-6510
DOI: 10.34218/IJM.12.4.2021.033
© IAEME Publication Scopus Indexed
IMPACT OF COVID-19 PANDEMIC ON

PERFORMANCE OF IPO’S IN INDIA
Sahil Goyal
Student, School of Business and Management, Christ (Deemed to be University),
Bangalore, India
ABSTRACT
The Novel coronavirus has become the world's most economically costly pandemics
recently. To provide an understanding of the effects of COVID-19 on the IPO market,
this paper investigates the impact of the COVID-19 pandemic on daily market returns
of newly listed companies over the period from 1st January 2020 to 31st October 2020.
Through this study, we found that IPO performance continued to thrive despite the
pandemic. Using panel data regression, we found IPO's response to daily new
confirmed cases and deaths is not significant. The performance of newly listed
companies responded negative to total deaths but not to a very great extent.
Key words: Daily returns; Impact of COVID-19; Panel data study; Initial public
offerings
Cite this Article: Sahil Goyal, Impact of Covid-19 Pandemic on Performance of IPO’S
in India, International Journal of Management (IJM), 12(4), 2021, pp. 373-393.
https://iaeme.com/Home/issue/IJM?Volume=12&Issue=4
1. INTRODUCTION
This study aims to understand and measure the impact of the COVID-19 pandemic and
implementation of the first lockdown, taken as a countermeasure to curb the effects of this
deadly virus on the performance of IPOs in India. The pandemic has caused a significant
economic collapse worldwide. This novel coronavirus is a viral disease caused by severe acute
respiratory syndrome 2(SARS-COV-2). Since the first case being detected in china's Wuhan
district in December 2019, by today, after spreading rapidly, the COVID-19 pandemic has
caused significant concern for public health as well as the economy of the world. This virus
was first detected in Wuhan, China, and first reported to the World Health Organization (WHO)
on 31st December 2019. According to data from the World Bank, India is the world's second-
most populous country with a total population of 125 million rupees. The first case was reported
on 30th January 2020. As of 30th October 2020, 1,26,235 people have died. Since it was a very
significant concern for the government of India, Prime Minister Narendra Modi announced and
ordered the first phase of the nationwide shut down on 24th March 2020, following 14 hours of
public curfew on the 22nd March 2020 at 500 active cases across the country, for a period of
time of 21 days. In order to prevent the spread of the deadly virus from continuing until 24th
https://iaeme.com/Home/journal/IJM 373 editor@iaeme.com

Impact of Covid-19 Pandemic on Performance of IPO’S in India
March, 2020, which will continue in its fourth phase until 31st May 2020. On 30th May, it was
announced that the quarantine restrictions would be lifted, and the current quarantine scope
would be expanded. Until 30th May 2020, it was only applicable to safe areas. Services were
gradually resumed on 8th June. In this study, the lockdown's influence due to COVID-19 and
daily & total confirmed cases and deaths on the performance of IPOs in India are explained
with the Panel data regression analysis. This Panel data study measures how rapidly IPO prices
respond to the lockdown's announcements and the rapidly increasing number of cases and
deaths due to COVID-19 in the country.
A growing body of literature analyses the impact of the fear of infection and death
associated with the COVID-19 pandemic on global stock markets' performance. However, no
studies have focused on the impact of the COVID-19 pandemic on the effectiveness and
performance of Indian IPOs. This study will not only help to examine the impact of this
pandemic but will provide a reference for investors and policymakers to make future decisions
in case of a new viral outbreak of virus or other extreme measures taken by nations such as
nationwide lockdown in order to flatten and curb the virus curve.
2. REVIEW OF LITERATURE
(Sharif, Pritam 2020) examined the relationship between COVID-19 anxiety and short-term
IPO performance. Although the market-adjusted average IPO average yield in 2020 is higher
than in the past four decades, this number is declining as fears about the pandemic intensify.
When they used adjusted initial adjusted returns, there is ample evidence. Next, they analysed
the sustainability of the results after the initial public offering. The results show that the
company's IPO results are more sensitive to pandemic fears than large companies. Using the
fear index, we found that the initial results related to pandemic fear are negative. When they
compared the company's IPO with last year's IPO, the results were convincing. In the past 40
years, they found that the impact of pandemic fear on initial IPO earnings is higher by nearly
9.30% of initial IPO earnings in 2020.
Al-Awadi et al. (2020), to study the impact of the COVID-19 pandemic on the Chinese
stock market, used a panel regression method using two indicators: (1) Daily increase in the
total number of confirmed cases; (2) Daily increase in the number of confirmed cases. The
results show that both of these indicators have a significant negative impact on return on equity.
For all participating companies. The Hang Seng Index and Shanghai Stock Exchange
Composite Index from 10th January to 16th March 2020. During the COVID-19 outbreak, these
industries performed better than others, especially the information technology and
pharmaceutical manufacturing industries. Their results also show that the returns of B shares
(held by overseas investors) and large-cap stocks are more dependent on COVID-19 stocks than
Class A stocks (mainly traded by Chinese nationals) and small stocks capital.
Liu et al. (2020) analysed the short-term and short-term impact of the COVID-19 outbreak
on 21 leading stock indexes in the main affected countries (including Japan, South Korea,
Singapore, the United States, Germany, Italy and the United Kingdom). They applied the event
research method and used the stock index's daily closing price data from 21st February 2019 to
18th March, 2020. The results showed that the COVID-19 epidemic had a negative impact on
the U.S. stock market and severely affected all U.S. stock markets. Affected countries. Also,
the results show that COVID-19 has a significant negative impact on the performance of major
stock indexes, and abnormal returns in Asia continue to decline.
Zhang et al. (2020) Use simple statistical analysis to study the relationship between stock
market risks and the COVID-19 outbreak in global financial markets. They used stock market
data on the number of confirmed cases in the ten most-affected countries (along with Japan).
(South Korea and Singapore) Before 27th March, 2020, it was discovered that the epidemic had

Sahil Goyal
brought huge risks and uncertainties to the global financial market, and the risk for all countries
is between February 2020 and March 2020. Both have increased significantly.
Harjoto et al. (2020) Using the event research method, the WHO announcement on 11th
March, 2020 and the Federal Reserve announcement on 9th April 2020 is taken as two events
representing shock and motivation. The results show that COVID-19 has had a negative impact
on global stock markets, especially in emerging markets and small businesses. Other results
indicate that, relative to other developed and emerging markets, the U.S. stock market has
received positive abnormal returns from the Fed's stimulus measures. The most positive benefits
of the stimulus measures are obtained by large American companies, not small companies.
(Niall O Donnell, 2020) It is expected that border closures and traditional trade due to the
COVID-19 pandemic will have a lasting financial impact. We examine the stock markets in the
five regional epicentres and the "global" epicentre to determine whether the rise in COVID-19
has affected the index price. After considering investor sentiment, credit risk, liquidity risk, safe
harbour demand and oil prices, we also studied the impact of COVID-19. However, they
explained the index price changes in Spain, Italy, the United Kingdom and the United States.
In China, similar results have not been observed in the "Global" Index (MSCI World) or when
the virus appeared. Our results show that in the event of a COVID-19 wave or further shocks
in the future, the government, regulatory agencies, and relevant stakeholders need to consider
early intervention (China) and the pandemic's temporal and spatial nature centre (world).
Extremely social
(HaiYue Lie, 2020) The article assesses the short-term impact of the coronavirus outbreak
on the 21 major stock indexes of major affected countries such as Japan, South Korea,
Singapore, the United States, Germany, Italy, and the United Kingdom. The impact of
infectious diseases is huge and directly affects stock markets around the world. Our activity
research results show that the stock markets of the main affected countries and regions fell
rapidly after the outbreak. Asian countries have higher negative abnormal returns than other
countries. The return of the effect also confirms the negative impact of confirmed COVID-19
cases on stock indexes with abnormal returns through effective channels and aggravates
investors' pessimism about future returns and fear of uncertainty.
(Stefan, Daniel, Camelia, 2020) This article uses daily stock market returns from 31st
December 2019 to 20th December 2019 to find markets' relationships during the 2019
Coronavirus Disease (COVID-19) outbreak. April 2020 is applicable to the following
countries/regions: United States, Spain, Italy, France, Germany, United Kingdom, China and
Romania. The study used the ARDL (Autoregressive Distributed Lag) model to determine
whether the Romanian stock market was affected by the novel coronavirus crisis. The causal
relationship between COVID-19 and stock market earnings and the causal relationship between
pandemic response and various raw materials. On the other hand, our quantitative method
shows the negative impact of Italy's recent deaths on the short- and long-term yields of
Romanian 10-year bonds. Econometric research shows that Romania's 10-year government
bonds are more sensitive to COVID-19 news than the Bucharest stock market index. Granger's
causality analysis determined the causal relationship between individual stock markets'
performance and the Philadelphia Gold/Silver Index.
(Baker, 2020) Previous infectious disease outbreaks, including the Spanish flu, have not
had the same impact on the stock market as the COVID-19 pandemic. In fact, previous
epidemics left almost no mark on the U.S. stock market. We use text-based methods to develop
them. We also looked at possible explanations for the unprecedented response of the stock
market to the COVID-19 pandemic. Commercial activities and voluntary social distancing have
had a significant impact on the service-oriented economy. This is the main reason why the U.S.

stock market has responded more to COVID-19 than in the pandemics before 1918-19 and
1957-58. And 1968.
(Cepoi, 2020) studied the impact of COVID19-related news on stock returns in the six
countries with the worst pandemic (the United States, the United Kingdom, Germany, France,
Spain, and Italy). The results show that fake news has a negative impact on the middle and
lower quantiles of the return distribution. Other results indicate that media coverage can lead to
lower profitability. Financial infections between companies will seriously affect the
profitability of the quantile between 50 and 75.
(Mohamed Sherif, 2020) examined the rapid spread of the coronavirus (COVID-19) and its
short-term impact on the Shariah-compliant Dow Jones Market Index to capture the dynamic
behaviour of economic and industrial stock returns. The results of the U.K. industrial clusters
on May 20-20 and 10 May show a close and statistically significant relationship between the
COVID-19 pandemic and the common stock index. The results also indicate that the disease
has a negative but no significant interaction with the Dow Jones Index. Jones' Islamic Ethics
Index is compared with that of the United Kingdom. Besides, according to the analysis of
industry categories, the document shows that the revenue of I.T. inventory is significantly
higher than the market. In comparison, the revenue of non-essential consumer goods sectors,
including transportation, beverages, travel and leisure, and consumer services, are significantly
higher than the market. During the year, the COVID outbreak became more serious. -19. Other
sector groups cannot provide reliable parameter values.
(Ashraf, 2020) After considering the systemic risks of national characteristics and
international factors, Ashraf (2020) uses panel data analysis to examine the impact of confirmed
COVID-19 confirmed cases and increased deaths on stock market returns. He used returns data
for 64 countries/regions from 22nd January 2020 to 17th April 2020. The results show that, in
some cases, the stock market is very sensitive to negative growth returns, but the response to
rising mortality rates is negligible. Other results also showed that the stock market reacted
strongly a few days before the confirmation of the decline, and then 40-60 days after the first
confirmation of the decline. The results show that under certain circumstances, the stock market
reacts strongly to the negative growth rates. But the response to increased mortality was not
statistically significant. A few days before the occurrence of the confirmed case, and then
between 40 and 60 days after the occurrence of the first confirmed case, the stock market
reaction was strong.
Thus, we are contributing to the rapidly growing literature on the impact of Covid-19 on
major markets, with a focus on IPOs during this period. This study attempts to answer the
following questions: What is the impact of the COVID-19 outbreak based on India's IPO yield
from 30th January 2020 to 30th October 2020.
2.1 Statement of the Problem

COVID-19 immediately affected all businesses & services worldwide, with nations imposing
extreme measures such as lockdown in an attempt to curb the effects of the virus on public
health. However, with the outbreak of the infection, the stock market collapsed, and economic
activity has slowed down to a great extent. Investors did not anticipate this move, so they could
not adopt methods to save their investments. However, soon, in the following months, it formed
a very V-shaped shape. Thus, there is a need for deep analysis on its impact on IPOs that took
place in an economy like India, which was already shaken before the pandemic. From the above
literature review, it can be concluded that there are very limited researches are done during this
period on primary market performance since all studies have been done majorly on secondary
markets. Therefore, it is viable to conduct research on the "Impact of COVID-19 pandemic on
the performance of IPO’s in India

Sahil Goyal
3. RESEARCH OBJECTIVES
• To identify the various factors of the COVID-19 pandemic which influence the
performance of IPO in India.
• To analyse the impact of the COVID-19 pandemic on the overall performance of IPOs
in India.
• To analyse the impact of the COVID-19 pandemic on individual IPO companies’
performance in India.
3.1 Hypothesis
H0: There is no significant impact of COVID-19 pandemic on the performance of IPOs in India
H1: There is a significant impact of COVID-19 pandemic on the performance of IPOs in
H0: There is no significant impact of COVID-19 pandemic on the Individual performance of
the IPOs in India.
H1: There is a significant impact of COVID-19 pandemic on the Individual performance of the
IPOs in India.
3.2 Data and Methodology

Coverage: This study is based entirely on secondary data covering the most recent period of
this year 2020, from 1st January 2020 to 31st October 2020.
Scope of Study: This study's scope was limited to the impact on the Indian Stock Market only
and not on other economic and non-economic impacts it did or is supposed to do in the future.
Data Collection: In order to study the impact of the COVID-19 pandemic on the performance
of India’s IPOs, I used data collected by the Ministry of Health and Family Welfare and
Worldometer.com, which shows the number of daily new Covid-19 confirmed cases and daily
new deaths over the period from 30th January till 30th October 2020. Over the same period, I
used daily closing prices market returns data of all the IPO’s conducted during this period. This
data was obtained from NSE India and the BSE India website. In addition, we dropped the
observations of all those newly listed companies for which daily stock market returns were not
available because of markets being closed on national holidays and on weekends. Therefore,
the final dataset consists of 26 companies that were listed recently from 30th January till 30th
October 2020, which I consider adequate to produce robust estimations.
Methodology: To investigate the impact of the COVID-19 outbreak on IPO’s, I prefer using
a panel data regression model. Panel data models can better capture the heterogeneity related
to cross-sectional units and time dimensions, reduce distortion and multicollinearity, and are
more suitable for studying dynamics and complex behaviour models. Also, due to the evolving
nature of the COVID-19 spread over time, several earlier studies preferred using the panel data
technique over the event study approach; specifically, I consider the following panel data model
equation (1):
Yit = α0 + β1 Daily new confirmed cases + β2 Daily new confirmed deaths
+ β3 Total Cases + β4 Total Deaths + β5 Dummy Lockdown Period
In this model of equation (1), ‘Y’ is the dependent variable, and 't' stands for date. It
indicates the IPO returns in the Indian Market, which is measured as the daily change in the
closing prices of IPO in India. α0 is a constant term. To test the impact of the COVID-19 spread
on IPO market returns, it is measured by the four following variables: (1) DNCC, which is the
daily new confirmed cases; (2) DNCD, which is the daily new confirmed deaths; (3) T.C.,
which is the Total cases; (4) T.D., Which is the Total Deaths and (5) DLP, which is the dummy
Lockdown phase.

The present study investigates the impact of the COVID-19 outbreak on IPO daily returns
of 26 companies in India over the period from 30th January till 30th October 2020 by employing
the panel data model as described in equation (1) presented above. However, before running
further analysis, it is needed to perform a stationary test for all the independent variables
included in this model equation. The stationarity of variables has been tested using the
Augmented Dickey-Fuller (ADF) unit root test.
The hypothesis to this extent is
H0: The data series is Non-Stationary (Null Hypothesis)
H1: The data series is Stationary (Alternate Hypothesis)
Additionally, in order to analyse the relationship between daily market returns and
pandemic variables such as new cases, new deaths, total cases, total deaths and dummy
lockdown period, correlation analysis was conducted between these variable
In order to understand the combined effect, we had used panel data analysis, and we had
run the ordinary least square regression analysis of all the individual companies to test for
individual fixed effects. Suppose the Probability value is less than 0.05 or 5%. In that case, it is
significant, and the Null hypothesis is rejected, i.e., there is a significant impact of independent
variables such as New cases, new deaths, total cases, total deaths on daily returns of selected
IPO companies and Vice versa.
Justification of Selection of Variables: The impact of COVID-19 is an abstract idea; hence,
quantifying the impact in measurable terms, the daily new & total confirmed cases and
confirmed deaths are considered as proxies for the impact of the pandemic in India.
The impact of the above mentioned independent variables is measured on the dependent
variables, i.e. daily returns of IPOs listed between January and October 2020. As the stock
prices move in a non-linear manner, therefore the daily returns are calculated by taking the
natural logarithm of all the series as depicted in the following equation (2):
𝑃1
𝑅𝑖 = ln [ ] 𝑥 100
𝑃0
Ln is the natural logarithm, P1 is the daily's closing price, and P0 is yesterday's closing price
of respective IPO companies.
Also, to consider the impact of the lockdown period on IPOs performance, a dummy
variable has been introduced, .i.e. the dummy lockdown period. In this dummy variable, the
data coming in between 25th March 2020 till 14th April 2020 has been assigned a value of 1,
while the rest have been assigned a value of 0. In other words, the data set between this time
frame is considered as the treated group, while the rest of the data is considered as a control
group.
3.3 Limitations
The study would have some limitations as the study takes the data only for the IPO's happened
during COVID-19.
The study covered only NSE listed IPOs.

Sahil Goyal
4. ANALYSIS AND INTERPRETATION

4.1 Descriptive Statistics
Table 1 Descriptive Statistics
IPO
DAILY_RETURNS NEW_CASES NEW_DEATHS TOTAL_CASES TOTAL_DEATHS
Mean 0.006506 40054.69 587.8574 2476523. 42476.21
Median 0.000000 40425.00 606.0000 1192915. 28732.00
Maximum 18.23216 97894.00 2003.000 7597063. 115197.0
Minimum -22.31436 0.000000 0.000000 1.000000 0.000000
Std. Dev. 5.655861 32767.62 421.2463 2632474. 39985.21
Skewness -0.559189 0.114852 0.029100 0.688246 0.489833
Kurtosis 5.982525 1.477211 1.994311 1.926706 1.738593
Jarque-Bera 461.2305 110.1830 47.14581 141.5443 118.5102
Probability 0.000000 0.000000 0.000000 0.000000 0.000000
Sum 7.098307 44660982 655461.0 2.76E+09 47360979
Sum Sq. Dev. 34867.76 1.20E+12 1.98E+08 7.72E+15 1.78E+12
Observations 1091 1115 1115 1115 1115
Table 1 shows the descriptive statistics of the variables included in our study. The mean is
the average of all observation values. It can be seen that the maximum daily stock return during
the period is 18%, and the minimum is −22%. The highest growth in daily New confirmed cases
is 2003%, and the highest growth in daily new cases of death caused by COVID-19 is
7597063%. Standard deviation is known as the measure of volatility, which tells us how tightly
the data values are clustered around the mean, and we can see that New Cases is highly volatile
among the other variables. Skewness is a measure of symmetry. Here, we have all positives
skewness; thus, the right side of the distribution is longer or fatter than the tail on the left side.
Kurtosis is a measure of whether the data points are heavy-tailed or light-tailed relative to a
normal distribution.
4.2 Correlation
The aims to analyse the relationship between Daily Market Returns, New Cases, New Deaths,
Total cases, Total deaths and Dummy Lockdown Period for which a correlation analysis was
conducted between these variable, and the results are as follows.
Table 2 Correlation Matrix
DMR DLP NC ND TC TD
DAILY_RETURNS 1 0.0634 -0.0571 -0.0392 -0.0822 -0.0771
DUMMY_LOCKDOWN_PERIOD 0.0634 1 -0.5273 -0.5594 -0.4254 -0.4727
NEW_CASES -0.0571 -0.5273 1 0.9280 0.8408 0.8825
NEW_DEATHS -0.0392 -0.5594 0.9280 1 0.7233 0.7791
TOTAL_CASES -0.0822 -0.4254 0.8408 0.7233 1 0.9944
TOTAL_DEATHS -0.0771 -0.4727 0.8825 0.7791 0.9944 1
Table 2 above reports the correlation Matrix. It reveals that all the COVID variables (N.C.,
ND, T.C., T.D. have no linear relationship or very weakly negatively correlated with Daily
market returns (DMR)

4.3 Unit Root Test

Before running the Ordinary least square regression analysis, it is needed to perform a stationary
test for all the independent variables included in this model equation. The stationarity of
variables has been tested using the Augmented Dickey-Fuller (ADF) unit root test.
Table 3
Null Hypothesis: DAILY_RETURNS has a unit root
t-Statistic Prob.*
Augmented Dickey-Fuller test statistic -8.964064 0.0000
Test critical values: 1% level -3.437377
5% level -2.864531
10% level -2.568416
Table 3 shows the p-value is less than the significance level of 0.05, the null hypothesis is
rejected, and the data is deemed stationary at level form.
Table 4
Null Hypothesis: NEW_CASES has a unit root
t-Statistic Prob.*
5% level -2.864305
10% level -2.568294
Table 5
Null Hypothesis: NEW_DEATHS has a unit root

t-Statistic Prob.*
5% level -2.864233
10% level -2.568256
Table 6
Null Hypothesis: D(TOTAL_CASES) has a unit root

t-Statistic Prob.*
5% level -2.864233
10% level -2.568256
rejected, and the data is deemed stationary at the 1st level of difference.

Sahil Goyal
Table 7
Null Hypothesis: D(TOTAL_DEATHS) has a unit root

t-Statistic Prob.*
5% level -2.864233
10% level -2.568256
rejected, and the data is deemed stationary at the 1st level of difference.
Table 8
Null Hypothesis: LN_NC has a unit root

t-Statistic Prob.*
5% level -2.863979
10% level -2.56812
Table 9
Null Hypothesis: LN_ND has a unit root

t-Statistic Prob.*
5% level -2.8641
10% level -2.568185
Table 10
Null Hypothesis: LN_TC has a unit root

t-Statistic Prob.*
5% level -2.864038
10% level -2.568152

Table 11
Null Hypothesis: LN_TD has a unit root
t-Statistic Prob.*
5% level -2.864038
10% level -2.568152
rejected, and the data is deemed stationary at the level form.
Table 12
Null Hypothesis: DUMMY_LOCKDOWN_PERIOD has a unit root
t-Statistic Prob.*
5% level -2.863984
10% level -2.568122
rejected, and the data is deemed stationary at the level form.
Table 13 Probabilities
S.R. No Name Probability
1 Daily Returns 0.0000
2 New Cases 0.0000
3 New Deaths 0.0000
4 D(Total Cases) 0.0450
5 D(Total Deaths) 0.0164
6 LN_NC 0.0000
7 LN_ND 0.0000
8 LN_TC 0.0000
9 LN_TD 0.0000
10 Dummy Lockdown Period 0.0000
Source: Done by Author's own calculation using E-Views Software
The probability values in Table 13 indicate that the variables are stationary at level form.
Now, we can proceed with further research, enabling accurate analysis using Ordinary least
square regression analysis.
4.4 Regression Analysis

Table 14
Method: Least Squares
Included observations: 1090 after adjustments
Variable Coefficient Std. Error t-Statistic Prob.
C -0.171039 0.392366 -0.435918 0.663
NEW_CASES -4.02E-06 1.75E-05 -0.229583 0.8185
NEW_DEATHS 0.001034 0.001314 0.787124 0.4314

Sahil Goyal
D(TOTAL_CASES) -7.73E-06 7.40E-06 -1.044969 0.2963

D(TOTAL_DEATHS) 0.00025 0.000552 0.452172 0.0455
DUMMY_LOCKDOWN_PERIOD 0.877811 0.537025 1.634582 0.1024
Mean
R-squared 0.035004 dependent var -0.002105
SD dependent
Adjusted R-squared 0.144114 var 5.651297
Akaike info
SE of regression 5.564296 criterion 6.276107
Schwarz
Sum squared resid 33562.14 criterion 6.303597
Hannan-
Log-likelihood -3414.478 Quinn criteria. 6.286511
Durbin-
F-statistic 7.864144 Watson stat 1.800148
Prob(F-statistic) 0
The R Square value shows 0.0350. It clearly indicates that only 3.50% of variations
independent variable (Daily returns) can be explained by all the independent variables. The
total variation independent variable, i.e., Daily Return, can be explained by the independent
variables, i.e. N.C., ND, T.C., T.D. and in this case, 18.63% can be explained, which is not very
large. The adjusted R2 tells you the percentage of variation explained by only the independent
variables that affect the dependent variable, i.e., 14.41%. Here, 5.65 is the standard error of the
estimate representing a measure of the dispersion (or variability) in a regression's predicted
scores. The mean and standard error of the dependent variable Daily return is 0.0021 and 5.651,
respectively. D.W. stat is used to find out if there is a first-order serial correlation in the error
terms. 1.800 indicates a positive serial correlation since the D.W. value is less than 2.
Based on the data, it is clear that New Cases, New Deaths and Total cases have an
insignificant relationship on the performance of IPO measured in India during COVID-19
measured by Daily returns. At the same time, Total Deaths has a very minimal impact on the
performance of IPOs in India. Also, the main results indicate that during this period of
coronavirus outbreak, Indian IPO's return responded negatively with the rise in Total COVID-
19 Deaths.
We also ran a fixed panel regression analysis of all the individual companies to test for
individual fixed effects.
Table 15
Dependent Variable: DAILY_RETURNS

Std.
Variable Coefficient Error t-Statistic Prob.
C 2.914007 4.895107 0.59529 0.5556
LN_NC 1.388985 4.948928 0.280664 0.7807
LN_ND -1.493113 6.984435 -0.213777 0.832
LN_TC -2.552775 3.944778 -0.647128 0.5219
LN_TD 2.987922 5.368929 0.556521 0.5815
DUMMY_LOCKDOWN_PERIOD -1.760395 5.778782 -0.304631 0.7625
Table 15 shows no significant impact of New cases, New Deaths, Total cases, and total
deaths on Gian Life Care Ltd's daily returns.

Table 16

Std.
C 0.082438 3.184717 0.025885 0.9794
LN_NC -1.971838 1.945891 -1.013334 0.3138
LN_ND 1.938328 2.295512 0.844399 0.4008
LN_TC 0.950006 1.927481 0.492874 0.6234
LN_TD -0.418645 2.199748 -0.190315 0.8495
DUMMY_LOCKDOWN_PHASE 1.957915 3.247012 0.60299 0.5481
Table 16 shows a significant impact of New Deaths and total deaths on Janus Corp Ltd's
daily returns.
Table 17

C 3.77913 3.245041 1.164586 0.2467
LN_NC 3.31918 1.745984 1.901037 0.0599
LN_ND 0.480204 2.037859 0.235642 0.8141
LN_TC -3.290851 1.699551 -1.936307 0.0554
LN_TD 0.40961 1.985086 0.206343 0.8369
deaths on ICL Organic Ltd's daily returns.
Table 18
Std. t-
Variable Coefficient Prob.
Error Statistic
C 2.543225 4.751161 0.535285 0.5944
-
LN_NC -1.723628 3.684314 0.6416
0.467829
LN_ND 3.677469 3.559053 1.033272 0.3056
-
LN_TC -0.712496 3.16172 0.8225
0.225351
-
LN_TD -0.039269 3.330438 0.9906
0.011791
deaths on Tramway Tech Ltd's daily

Sahil Goyal
Table 19

Std.
C -1.67191 3.382775 -0.494242 0.6222
LN_NC -1.164484 2.369915 -0.491361 0.6242
LN_ND -0.936413 2.74755 -0.340817 0.7339
LN_TC 0.610067 2.32176 0.262761 0.7933
LN_TD 1.055151 2.495685 0.42279 0.6733
deaths on Chandra Bhagat Pharma's daily returns.
Table 20

Std.
C 9.867356 5.045375 1.955723 0.0524
LN_NC -1.404214 1.348531 -1.041292 0.2995
LN_ND -1.235941 1.113391 -1.110069 0.2688
LN_TC -2.345179 1.585864 -1.478802 0.1414
LN_TD 4.4959 1.863336 2.412823 0.0171
DUMMY_LOCKDOWN_PHASE -0.907007 0.821331 -1.104313 0.2713
Table 20 shows a significant impact of all the variables such as New Cases, New deaths,
Total cases, and total deaths on SBI Cards IPO's daily returns.
Table 21

Std.
C 34.75781 28.52033 1.218703 0.2328
LN_NC -0.828417 6.015359 -0.137717 0.8914
LN_ND -6.950182 4.235944 -1.640763 0.1116
LN_TC -8.115233 9.082133 -0.893538 0.3789
LN_TD 12.80126 11.1866 1.144338 0.2618
Table 21 shows there is a significant impact of New Deaths on daily returns of CosPower
Engineering. For every new death case, there is a negative impact of 6.968 units on its daily
returns.

Table 22

Std.
C -8.535759 8.649629 -0.986835 0.3267
LN_NC -1.715785 2.962349 -0.579198 0.5641
LN_ND 0.7286 1.748119 0.416791 0.6779
LN_TC 2.765454 4.003406 0.690775 0.4917
LN_TD -1.691562 4.683957 -0.36114 0.7189
deaths on D.J. Media Print Ltd's daily returns.
Table 23

C 1.563056 10.36125 0.150856 0.881
LN_NC -0.447906 2.825986 -0.158496 0.875
LN_ND 3.257779 2.407194 1.353352 0.1851
LN_TC 1.072315 4.024831 0.266425 0.7916
LN_TD -3.00708 5.549008 -0.541913 0.5915
Table 23 shows there is no significant impact of New cases, New Deaths, Total cases and
total deaths on daily returns of Nirmitte Robotics.
Table 24

C 66.55012 43.88146 1.516588 0.1402
LN_NC -9.037595 15.31566 -0.590088 0.5597
LN_ND -9.164351 15.88772 -0.57682 0.5685
LN_TC 118.4518 129.1048 0.917486 0.3665
LN_TD -152.8031 169.9676 -0.899013 0.3761
deaths on Ballwin Industries' daily returns.

Sahil Goyal
Table 25
C 9.11051 20.39994 0.446595 0.6569
LN_NC -5.281015 4.512161 -1.170396 0.2467
LN_ND 2.295769 4.071529 0.563859 0.5751
LN_TC 46.94686 46.06839 1.019069 0.3125
LN_TD -60.92371 60.44478 -1.007923 0.3178
deaths on Rossari Biotech Ltd's daily returns.
Table 26
C 32.42244 38.09358 0.851126 0.3998
LN_NC -14.1185 12.92604 -1.092253 0.2813
LN_ND 4.316011 11.44684 0.377048 0.7081
LN_TC 138.8222 108.3896 1.280771 0.2077
LN_TD -180.4648 143.5535 -1.257125 0.216
total deaths on daily returns of Ksolves Ltd.
Table 27
C 61.5284 58.04391 1.060032 0.3001
LN_NC -18.18379 15.80193 -1.150732 0.2617
LN_ND 8.02938 10.52448 0.762924 0.4533
LN_TC -42.3375 110.1294 -0.384434 0.7042
LN_TD 65.38369 144.163 0.45354 0.6544
total deaths on the daily returns of Bonlon Industries.
Table 28
C 12.35984 7.400958 1.670032 0.102
LN_NC -1.335524 1.298919 -1.028181 0.3095
LN_ND 1.185493 1.003028 1.181914 0.2436
LN_TC -12.13201 18.44722 -0.657661 0.5142
LN_TD 16.04148 23.96115 0.669479 0.5067
deaths on Mind Space Ltd's daily returns.

Table 29
C -6.137496 40.21458 -0.152619 0.88
LN_NC 2.089037 5.130217 0.407202 0.6875
LN_ND -3.002233 6.754284 -0.444493 0.6607
LN_ND 3.96776 5.210238 0.761531 0.4538
LN_TD 135.0101 31.85483 4.238293 0.0003
deaths on Suratwala Business Group's daily returns.
Table 30
C -16.0211 3.812437 -4.202326 0.0522
LN_NC 94.96546 62.4039 1.521787 0.2675
LN_ND -60.79813 38.02403 -1.59894 0.2509
LN_TC -1691.588 538.7153 -3.140041 0.0882
LN_TD 2253.635 721.8874 3.121866 0.0891
total deaths on daily returns of Trekkingtoes Ltd.
Table 31
C -0.764557 1.222512 -0.625398 0.5411
LN_NC 7.507356 8.067073 0.930617 0.3668
LN_ND -9.292041 6.811828 -1.364104 0.1927
LN_TC -1480.604 854.7799 -1.732147 0.1038
LN_TD 1818.554 1051.119 1.730112 0.1041
deaths on Happiest Mind IPO's daily returns.
Table 32
C -0.326391 2.715584 -0.120192 0.9059
LN_NC 13.9905 15.34794 0.911556 0.3764
LN_ND -5.684491 11.26847 -0.50446 0.6213
LN_TC -754.4367 1559.384 -0.483804 0.6355
LN_TD 986.7873 1876.304 0.525921 0.6066
deaths on Route Mobile ltd IPO's daily returns.

Sahil Goyal
Table 33
C 0.298999 0.325894 0.917474 0.3805
LN_NC 0.371872 1.728767 0.215108 0.834
LN_ND -1.223853 1.271467 -0.962552 0.3585
LN_TC -289.7324 183.8933 -1.575546 0.1462
LN_TD 318.72 215.7401 1.477333 0.1704
deaths on Advait Infratech IPO's daily returns.
Table 34
C -0.940297 2.058214 -0.456851 0.6639
LN_NC 6.659589 8.26906 0.805362 0.4513
LN_ND -4.085149 7.100189 -0.575358 0.586
LN_TC 72.20643 964.0741 0.074897 0.9427
LN_TD -163.0905 1123.213 -0.1452 0.8893
deaths on Angel Broking's daily returns.
Table 35
C 5.602286 1.634144 3.42827 0.0266
LN_NC 18.04276 9.268198 1.946739 0.1234
LN_ND -40.54416 16.49798 -2.457522 0.0699
LN_TC -2806.777 971.8811 -2.887984 0.0447
LN_TD 2811.997 1048.032 2.683121 0.055
Table 35 shows there is a significant impact on Total cases on daily returns of Atam Valves
Ltd IPO.
Table 36
C -0.315293 1.018329 -0.309618 0.7659
LN_NC -5.119037 5.489905 -0.932445 0.3821
LN_ND 1.038965 4.50351 0.230701 0.8241
LN_TC -94.17856 633.9334 -0.148562 0.8861
LN_TD 90.14944 766.6327 0.117591 0.9097
deaths on Computer Age Management Services Ltd IPO's daily returns.

Table 37
C -30.82771 27.33626 -1.127722 0.4618
LN_NC -72.23708 91.47844 -0.789662 0.5745
LN_ND 71.49466 61.8053 1.156772 0.4538
LN_TC -9870.407 9842.425 -1.002843 0.4991
LN_TD 12585.94 12691.69 0.991667 0.5027
deaths on SecMark Consul IPO's daily returns.
Table 38
C 1.68079 1.175074 1.430369 0.1957
LN_NC -0.124102 6.334931 -0.01959 0.9849
LN_ND -14.17377 5.196707 -2.727452 0.0294
LN_TC -20.092 731.5107 -2.828519 0.0255
LN_TD 204.248 884.6356 2.313097 0.0539
Table 38 shows that Log ND and Log T.C. significantly impact Chemcon chemicals Ltd's
performance. One new case of death reported than 14 points of stock reduces.
Table 39 P values of COVID-19 variables on Individual IPO companies from 30th January till 30th
October 2020
NO IPO’s Log New Log New Log Log
Cases Deaths Total Total
Cases Deaths
1 Gian Lifecare 0.7807 0.832 0.5219 0.5815
2 Janus Corp 0.3138 0.4008 0.6234 0.8495
3 ICL organic 0.0599 0.8141 0.0554 0.8369
4 Tranway Tech 0.6416 0.3056 0.8225 0.9906
5 Chandra Bhagat Pharma 0.6242 0.7339 0.7933 0.6733
6 SBI Cards 0.2995 0.2688 0.1414 0.0171
7 CosPower Engineering 0.8914 0.1116 0.3789 0.2618
8 D.J. Media print 0.5641 0.6779 0.4917 0.7189
9 Nirmitte Robotics 0.875 0.1851 0.7916 0.5915
10 Billwin Industries 0.5597 0.5685 0.3665 0.3761
11 Rossari Biotech 0.2467 0.5751 0.3125 0.3178
12 Ksolves 0.2813 0.7081 0.2077 0.216
13 BonlonIndustries 0.2617 0.4533 0.7042 0.6544
14 Mind Space 0.3095 0.2436 0.5142 0.5067
15 Suratwwala Business Group 0.6875 0.6607 0.4538 0.0003
16 Trekkingtoes 0.2675 0.2509 0.0882 0.0891

Sahil Goyal
17 Happiest Mind 0.3668 0.1927 0.1038 0.1041

18 Route Mobile 0.3764 0.6213 0.6355 0.6066
19 Advait Infratech 0.834 0.3585 0.1462 0.1704
20 Angel Broking 0.4513 0.586 0.9427 0.8893
21 Atam valves 0.1234 0.0699 0.0447 0.055
22 Computer age management services 0.3821 0.8241 0.8861 0.9097
23 Secmark Consul 0.5745 0.4538 0.4991 0.5027
24 Chemcon chemicals 0.9849 0.0294 0.0255 0.0539
5. SUMMARY OF FINDINGS
• The findings of the study successfully fulfil the objectives and the statement of the
problem of the study. This study examines the influence of the COVID-19 pandemic
during pre-lockdown and lockdown on daily stock returns of 26 newly listed firms on
the Indian stock market from 30th January till 30th October 2020.
• From the individual ordinary least square regression analysis, only two individual
companies significantly impacted total covid cases on their daily returns.
• From overall panel data results, the study found that new cases, new deaths, total cases
has no significant impact on the performance of IPOs. In contrast, total deaths have a
minimal significant impact on the performance of IPOs in India.
• Finally, from the results of this study, since the COVID-19 variables have an
insignificant impact on the performance of IPO's in India, thus the null hypothesis is
deemed to be rejected.
6. CONCLUSION
This study offers an initial analysis of how IPO stock markets react to the COVID-19 outbreak
in India. Using daily new confirmed cases and deaths & total confirmed cases and deaths and
IPO returns data in the Indian market; we find that IPO returns responded negatively to an
increase in total COVID-19 deaths. We further found that IPO return's response to the growth
in a number of new cases is very weak.
COVID-19 lockdown also had an insignificant association with Indian’s IPO stock returns.
In other words, the COVID-19 pandemic unsurprisingly did not affect Indian’s IPO stock
market as the Indian stock market had hit an all-time high despite the covid lockdown as the
pandemic had prompted the world central banks and economies to pump in various stimulus
packages (Approx. 8 trillion), which ultimately found its way to enter Indian equity markets via
foreign institutional investors, resulting in equity markets breaking its resistance and touching
its new highs.
Our research provides valuable insights for investors and policymakers, and they could be
helpful for financial authorities to address the adverse effects of the COVID-19 pandemic on
the primary and secondary market.
SUGGESTIONS
Finally, as a suggestion, further research is needed to study the effects of COVID-19 on the
IPOs listed on global stock markets such as NASDAQ and FTSE and to identify the sectors and
industries most hit and affected by the pandemic.

SCOPE FOR FURTHER STUDY

• Further study can find which subcategory of subscription, i.e. Retail, NII and QIB, has
the maximum impact on daily returns.
• A similar study can be conducted to find the impact of COVID-19 on IPO's in other
world stock exchanges of developed economies such as UAE, USA, U.K. etc.
REFERENCES
[1] Mazumder, S., & Saha, P. (2021). COVID-19: Fear of pandemic and short-term IPO
performance. Finance research letters, 101977. Advance online publication.
https://doi.org/10.1016/j.frl.2021.101977
[2] Liu H, Manzoor A, Wang C, Zhang L, Manzoor Z. The COVID-19 Outbreak and Affected
Countries Stock Markets Response. International Journal of Environmental Research and
Public Health. 2020; 17(8):2800. https://doi.org/10.3390/ijerph17082800
[3] Zhang D, Hu M, Ji Q (2020) Financial markets under the global pandemic of COVID-19.
Finance Res Lett 36: 101528.
[4] Maretno Agus Harjoto, Fabrizio Rossi & John K. Paglia (2020) COVID-19: stock market
reactions to the shock and the stimulus, Applied Economics Letters, DOI:
10.1080/13504851.2020.1781767
[5] Cepoi C. O. (2020). Asymmetric dependence between stock market returns and news during
COVID-19 financial turmoil. Finance research letters, 36, 101658.
https://doi.org/10.1016/j.frl.2020.101658
[6] Ashraf B. N. (2020). Stock markets’ reaction to COVID-19: Cases or fatalities?. Research
in International Business and Finance, 54, 101249.
https://doi.org/10.1016/j.ribaf.2020.101249
[7] Gherghina, Ș. C., Armeanu, D. Ș., & Joldeș, C. C. (2020). Stock Market Reactions to
COVID-19 Pandemic Outbreak: Quantitative Evidence from ARDL Bounds Tests and
Granger Causality Analysis. International journal of environmental research and public
health, 17(18), 6729. https://doi.org/10.3390/ijerph17186729
[8] O'Donnell, N., Shannon, D., & Sheehan, B. (2021). Immune or at-risk? Stock markets and
the significance of the COVID-19 pandemic. Journal of behavioural and experimental
finance, 30, 100477. https://doi.org/10.1016/j.jbef.2021.100477
[9] Scott R. Baker & Nicholas Bloom & Steven J. Davis & Kyle J. Kost & Marco C. Sammon
& Tasaneeya Viratyosin, 2020. "The Unprecedented Stock Market Impact of COVID-19,"
NBER Working Papers 26945, National Bureau of Economic Research, Inc.
[10] Sherif M. (2020). The impact of Coronavirus (COVID-19) outbreak on faith-based

investments: An original analysis. Journal of behavioural and experimental finance, 28,
100403. https://doi.org/10.1016/j.jbef.2020.100403
[11] Liu, H., Manzoor, A., Wang, C., Zhang, L., & Manzoor, Z. (2020). The COVID-19
Outbreak and Affected Countries Stock Markets Response. International journal of
environmental research and public health, 17(8), 2800.
https://doi.org/10.3390/ijerph17082800
[12] https://www.ey.com/en_in/ipo/india-ipo-trends-report

Sahil Goyal
[13] Info on IPOs. (n.d.). Retrieved from moneycontrol: https://www.moneycontrol.com/
[14] IPOs. (n.d.). Retrieved from Chittorgarh: https://www.chittorgarg.com/
[15] Issue. (n.d.). Retrieved from NSE India: https://nseindia.com/
[16] Public Issues - about IPO. (n.d.). Retrieved from BSE India:
https://www.bseindia.com/Static/PublicIssues/aboutIPO.aspx
[17] S, S. (2015, 13th May). Difference between primary market and secondary market.
Retrieved from keydifferences.com: https://keydifferences.com/difference-between-
primary-market-and-secondary-market.html

Impact of Covid-19 Pandemic On Performance of Ipo's in India

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Impact of Covid-19 Pandemic On Performance of Ipo's in India

Uploaded by

Copyright:

Available Formats

International Journal of Management (IJM)

Volume 12, Issue 4, April 2021, pp.373-393, Article ID: IJM_12_04_033

© IAEME Publication Scopus Indexed

IMPACT OF COVID-19 PANDEMIC ON

https://iaeme.com/Home/journal/IJM 373 editor@iaeme.com

https://iaeme.com/Home/journal/IJM 374 editor@iaeme.com

https://iaeme.com/Home/journal/IJM 375 editor@iaeme.com

2.1 Statement of the Problem

https://iaeme.com/Home/journal/IJM 376 editor@iaeme.com

3.2 Data and Methodology

https://iaeme.com/Home/journal/IJM 377 editor@iaeme.com

https://iaeme.com/Home/journal/IJM 378 editor@iaeme.com

4. ANALYSIS AND INTERPRETATION

Table 2 Correlation Matrix

https://iaeme.com/Home/journal/IJM 379 editor@iaeme.com

4.3 Unit Root Test

Null Hypothesis: NEW_DEATHS has a unit root

Null Hypothesis: D(TOTAL_CASES) has a unit root

https://iaeme.com/Home/journal/IJM 380 editor@iaeme.com

Null Hypothesis: D(TOTAL_DEATHS) has a unit root

Null Hypothesis: LN_NC has a unit root

Null Hypothesis: LN_ND has a unit root

Null Hypothesis: LN_TC has a unit root

https://iaeme.com/Home/journal/IJM 381 editor@iaeme.com

4.4 Regression Analysis

https://iaeme.com/Home/journal/IJM 382 editor@iaeme.com

D(TOTAL_CASES) -7.73E-06 7.40E-06 -1.044969 0.2963

Dependent Variable: DAILY_RETURNS

https://iaeme.com/Home/journal/IJM 383 editor@iaeme.com

Dependent Variable: DAILY_RETURNS

Dependent Variable: DAILY_RETURNS

https://iaeme.com/Home/journal/IJM 384 editor@iaeme.com

Dependent Variable: DAILY_RETURNS

Dependent Variable: DAILY_RETURNS

Dependent Variable: DAILY_RETURNS

https://iaeme.com/Home/journal/IJM 385 editor@iaeme.com

Dependent Variable: DAILY_RETURNS

Dependent Variable: DAILY_RETURNS

Method: Least Squares

https://iaeme.com/Home/journal/IJM 386 editor@iaeme.com

https://iaeme.com/Home/journal/IJM 387 editor@iaeme.com

https://iaeme.com/Home/journal/IJM 388 editor@iaeme.com

https://iaeme.com/Home/journal/IJM 389 editor@iaeme.com

https://iaeme.com/Home/journal/IJM 390 editor@iaeme.com

17 Happiest Mind 0.3668 0.1927 0.1038 0.1041

https://iaeme.com/Home/journal/IJM 391 editor@iaeme.com

SCOPE FOR FURTHER STUDY

[10] Sherif M. (2020). The impact of Coronavirus (COVID-19) outbreak on faith-based

https://iaeme.com/Home/journal/IJM 392 editor@iaeme.com

[13] Info on IPOs. (n.d.). Retrieved from moneycontrol: https://www.moneycontrol.com/

[14] IPOs. (n.d.). Retrieved from Chittorgarh: https://www.chittorgarg.com/

[15] Issue. (n.d.). Retrieved from NSE India: https://nseindia.com/

https://iaeme.com/Home/journal/IJM 393 editor@iaeme.com

You might also like