By Savyata Mishra and Niket Nishant

(Reuters) -Instacart's stock fell 5% on Wednesday, as the grocery delivery app joined other new stock market entrants in failing to keep up with strong gains on debut.

Investors were hoping that a recent wave of new listings would reignite the IPO market after a near 18-month dry spell, but stocks including chip designer Arm and RayzeBio have slipped from their debut highs amid persistent worries about high interest rates and inflation.

The market seems unsure of whether the economic conditions can continue to support the elevated valuations of those IPOs, said Mark Luschini, chief investment strategist at Janney Montgomery Scott.

Instacart, which counts Costco Wholesale, Kroger and Aldi among its retail partners, has seen its orders grow despite the pace slowing from pandemic highs as people stick with their lockdown habits of ordering groceries online.

"We are seeing ... the realization that consumers are still facing a cost-of-living crisis and that their willingness to pay an additional charge for home deliveries may be weaker than assumed," said Stuart Cole, chief macro economist at Equiti Capital.

Shares of the San Francisco-based firm were hovering at $32, after closing 12% higher in their Nasdaq debut on Tuesday, failing to hold onto an intraday gain of as much as 43%. The company's initial public offering on Monday had given it a valuation of nearly $9.9 billion.

"Enthusiasm for the company will be challenged by its ability to sustain margin expansion and revenue growth while facing elevated food price inflation and increased competition from food delivery providers Walmart, Amazon, and traditional grocers," said Alex Frederick, senior emerging technology analyst at PitchBook.

Instacart's total revenue for the six months ended June 30 rose 31% year-over-year while gross profit grew 44%, the company had revealed in its IPO filing.

The listing came almost three years after the company kicked off preparations to go public. In August, it announced interest from PepsiCo, which has agreed to buy $175 million in preferred convertible stock.

(Reporting by Savyata Mishra and Niket Nishant in Bengaluru, Additional Reporting by Ankika Biswas; Editing by Anil D'Silva and Devika Syamnath)