Zomato to Nykaa: What Nifty IPO Index tells you about India’s risk appetite - expert explains

As IPOs gain mainstream traction among retail investors, the Nifty IPO Index has emerged as more than just a performance benchmark — it now serves as a barometer of India’s risk appetite and market momentum. Investor and market commentator Abhijit Chokshi, in a post on X, explained that the Nifty IPO Index offers a concentrated view of how newly listed companies are performing within the broader market. This is especially valuable for investors, fund managers, and analysts seeking to gauge sentiment around growth-centric and high-risk sectors.

The Nifty IPO Index is designed to track the performance of the most recent 100 IPOs listed on the NSE. These companies become eligible for inclusion if they meet the required criteria and are allowed to trade on the NSE from their listing day.

What is the Nifty IPO Index?

Launched by the National Stock Exchange (NSE), the Nifty IPO Index monitors the performance of the 30 most valuable companies that have listed on Indian stock exchanges in the last three years. The selection is based on free-float market capitalization, and the index is rebalanced semi-annually. Stocks are removed after completing three calendar years from their listing date.

The index provides a focused perspective on how recently listed companies are faring in the broader market, making it an insightful tool for assessing sentiment toward high-growth and high-risk segments.

"The Nifty IPO Index is more than just a performance tracker; it also serves as a market mood indicator. It was created because IPO investing is no longer considered niche. Retail investors now eagerly participate in IPOs, hoping for significant Day 1 listing gains," noted Chokshi, founder of Stockifi.

Why the Nifty IPO Index matters now

IPO investing has evolved beyond institutional circles. In recent years, retail participation has surged, driven by expectations of strong listing-day returns and excitement around tech-led business models.

To capture this shift, the Nifty IPO Index was built with three core objectives:

To track the post-listing performance of newly launched IPOs.

To serve as a benchmark for IPO-focused mutual funds and ETFs.

To function as a sentiment indicator, reflecting market risk tolerance and momentum.

What sets it apart?

The index is heavily skewed toward consumer tech, fintech, and internet-first companies such as Zomato, Paytm, and Nykaa. These businesses tend to soar in bull markets but also react sharply during corrections, making the index highly volatile and sentiment-sensitive.

Performance trends:

In bull markets, The Nifty IPO Index often outperforms the broader Nifty 50, indicating high investor confidence and appetite for risk.

In bear markets, It underperforms significantly, as investors shift to safer assets.

Why investors should track it:

The Nifty IPO Index is a valuable tool for understanding the current pulse of India’s equity market. A rising index suggests investors are chasing growth and innovation. A falling index, on the other hand, signals rising caution and reduced risk-taking.

For those looking to identify the next generation of Nifty leaders, this index is one to watch closely.

In essence, the Nifty IPO Index isn’t just about recent listings—it’s a real-time reflection of India’s market mood and investor sentiment.