With scores of stocks trading way below their listing prices, UK Sinha, chairman, Securities and Exchange Board of India (SEBI), on Wednesday said the credibility of primary markets is at stake as retail investors on many occasions are left clueless about their returns.

"It has become a question of credibility, and we have to make a very serious attempt to restore the credibility," said Sinha. "If we failed to do that then whatever efforts we make, we will not be able to draw retail investors into the market for that matter, even institutional investors."

"Investment bankers need to introspect whether their behavior challenges the entire merit-based versus price discovery mechanism or not. We need some amount of sanity in pricing and initial public offering (IPO) disclosures," he said.

He also pointed out that at least two-thirds of the issues between 2009 and 2012 were trading below market decline levels.

"Call auction data show that volatility on opening day have reduced considerably," said Sinha. "SEBI has noticed in some IPOs that due diligence wasn't done properly."