The formula enriched millions of investors as companies raised heaps of cash through record IPOs. Shares of digital cosmetic retailer Nykaa soared nearly 80% in its debut on Nov. 10 following the company’s $713 million IPO. In late July, shares of food online delivery company Zomato surged more than 70% on their first day of trading after the company raised $1.26 billion in its offering.

But the get-rich-quick strategy is now unraveling as the Omicron COVID variant and last month’s disastrous debut of digital payments firm Paytm sap investor enthusiasm. After raising $2.44 billion in India’s biggest IPO ever, Paytm’s shares sank 27% below their issue price of $29 on its first day of trading in November and have stayed in that territory—roughly $20 per share—since.

Last week, Star Health and Allied Insurance Company intended to raise $961 million, but the IPO was only 79% subscribed. The cold reception broke a recent streak in which most offerings were oversubscribed. On Wednesday, the company pruned the size of its IPO to $847 million.

Star’s shares started trading on the Bombay Stock Exchange on Friday at a discount of 5.8% compared to its issue price of $11.9 before recovering to trade flat later in the day.

Star’s disappointing debut is a sign that India’s IPO market is no longer as buoyant as it was only weeks ago, a trend that threatens to stall India’s record-breaking streak of IPOs. 

“The market sentiment has definitely become more cautious, and things are not very gung-ho,” says Abhishek Basumalick, founder of equity advisory firm Intelsense. “I think the Paytm IPO has debunked the myth that if you apply for a big IPO you will get a big listing gain. When you have India’s largest IPO bombing on the day of its share debut, then it naturally sobers down investment sentiment,” Basumalick says. 

Another factor weighing on investors is the emergence of the Omicron COVID variant, a highly mutated strain of the virus that appears to transmit more easily than its predecessors and evade some vaccine defenses. India has reported 21 cases of the Omicron variant, raising the specter of a possible third wave of COVID.

“The Omicron situation is quite volatile [for the markets] as no one knows to what extent it will spread. There were quite a few IPOs lined up for December, but everyone will go on a wait-and-watch mode now,” says Pranav Haldea, managing director of Prime Database, an Indian database dedicated to the primary capital market.

Since hitting a peak of 62,156 points on Oct. 19, the Sensex has fallen nearly 6% and is likely to slide further if rising cases of Omicron prompt state governments to reimpose travel curbs and lockdowns. Earlier this month, India reversed a decision to resume international flights that was supposed to take effect Dec. 15 due to the global outbreak of Omicron. 

To be sure, the Indian IPO pipeline is still producing winners, though they tend to be companies with niche businesses whose offerings are smaller in size. In recent weeks, the IPOs of both Latent View, a data analytics provider, and Tega Industries, maker of specialized mining equipment, were oversubscribed. They raised $79.5 million and $82 million, respectively. Latent View’s share price rose to $10 in its debut last month, nearly four times its issue price, and has since settled at $8.40. Tega has not started trading yet.

But some companies currently in India’s IPO pipeline are likely to delay their plans to go public until market sentiment improves. Thirty-four Indian companies have gotten the green light from regulators to launch IPOs worth a combined $6.34 billion, and another 36 firms have sought permission to go public with offerings worth $8.9 billion collectively.

Fintech startup MobiKwik was expected to launch an IPO to raise $19 billion in November but has reportedly deferred its plans by several months.

The market uncertainty is likely to cast a shadow on the federal government’s IPO plans for the state-run Life Insurance Company, expected to be India’s biggest offering ever. The federal government is reportedly planning to raise around $12.2 billion from its stake sale. LIC is the country’s biggest insurer, with assets of over $450 billion, a subsidiary in Singapore, and joint ventures in Bahrain, Kenya, Sri Lanka, Nepal, Saudi Arabia, and Bangladesh. The issue was expected to hit the markets between January and March. 

Basumalick suggests that some large investors may be waiting to pour their money into the LIC IPO or a listing by the National Stock Exchange, one of India’s two leading stock exchanges. 

“The uncertainty in IPO and stock markets is likely to last at least until the end of the year,” says Basumalick. Hopefully, he says, “things will become clearer” in early 2022.