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Analyzing the stock market performance of central public sector enterprises disinvested through public offering mode: Indian evidence

Priya Mandiratta (Mittal School of Business, Lovely Professional University, Phagwara, India)
G.S. Bhalla (Guru Nanak Dev University, Amritsar, India)

Benchmarking: An International Journal

ISSN: 1463-5771

Article publication date: 18 March 2022

Issue publication date: 14 February 2023




The present study aims to examine the short-term effect of disinvestment oriented IPOs and FPOs on the stock market performance of Indian central public sector enterprises (CPSEs), which divested their equity between 2000 and 2017.


The analysis of stock price reaction is conducted for listing dates only in the case of IPOs and three different dates in the case of FPOs through the event study methodology. The three-event dates related to FPOs are public notification date (PND), issue announcement date (IAD) and price band date (PBD).


Overall empirical analysis indicates that investor sentiments are generally insignificant prior to and posts the PND (first date). The second major date of announcement that is (IAD) is new information in the market and returns are found to be significantly negative across both the periods that is before and after IAD. Thus, the analysis depicts strongly negative investor sentiments in the case of IAD. These results are further substantiated by negatively significant CAR (cumulative abnormal returns) values for both the pre and post-event windows of PBD as well.

Research limitations/implications

Empirical analysis concludes that investors do not stand a chance to gain abnormal returns through initiating positions in the stocks of CPSEs during the alternative event dates analyzed.


Since the year 2000, disinvestment through public offering has gathered momentum, and this mode accounts for approximately 62% of the collective disinvestment funds generated by the government of India till now. But there have been very limited research studies on the market performance of disinvested CPSEs. This analysis provides new empirical evidence for the market reactions of retail investors in response to the sale of equity by the Indian government in CPSEs.



Mandiratta, P. and Bhalla, G.S. (2023), "Analyzing the stock market performance of central public sector enterprises disinvested through public offering mode: Indian evidence", Benchmarking: An International Journal, Vol. 30 No. 2, pp. 407-432.



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