Securities and Exchange Board of India on Wednesday cautioned the credibility of primary markets is at stake as retail investors on many occasions are left clueless about their returns as scores of stocks are trading way below listing price.
It also said investment bankers need to introspect their role on the price discovery mechanism for these markets.
"The credibility of our markets is at stake. The i-bankers need to introspect whether their behaviour challenges the entire merit-based versus price discovery mechanism or not.
"We need some amount of sanity in pricing and IPO disclosures," Sebi chairman U K Sinha told a summit of i-bankers in Mumbai.
Stating that many of the newly-listed stocks are trading below listing price, Sinha said: "There is something wrong if two-thirds of the issues between 2009 and 2012 are trading below market decline levels.
"Call auction data show that volatility on opening day have reduced considerably.
"Sebi has noticed in some initial public offers that due diligence wasn't done properly.
Assets mentioned were missing or weren't even mentioned," he said.