MUMBAI: India’s equity market has emerged as a formidable player on the global stage, recently noted for recording the highest initial public offerings (IPOs) worldwide.
According to a report from the wealth management firm Angel One Wealth, the remarkable achievement can be attributed to a robust influx of capital from domestic investors.
In the first half of 2024 alone, more than 5,450 companies were listed across the globe, with India contributing approximately 25 per cent to this tally, underscoring the nation’s growing prominence in the international financial landscape.
The momentum in India’s IPO market is not a novel phenomenon; it follows a significant trend observed in the previous year.
Optimistic outlook
The influx of domestic investment into emerging companies and sectors has catalysed a surge in IPO listings, driven by an optimistic outlook among investors. As noted by Angel One Wealth, this pattern reflects the increasing confidence of Indian investors in the potential for substantial returns within the domestic market, further bolstered by favourable economic indicators.
Globally, the IPO market reached unprecedented heights in 2021, witnessing the listing of 2,388 companies that collectively raised a staggering $453.3 billion—the highest figure recorded in two decades.
The contrasting trends observed in different nations demonstrate India’s exceptional performance, particularly in the context of the BSE IPO index, which has delivered an astounding 348 per cent absolute gain compared to the 165 per cent gain of the benchmark BSE 500 index.
The substantial outperformance is indicative of the strong listing gains that have characterised the Indian IPO landscape.
Moreover, the thriving spectrum of Small and Medium Enterprises (SMEs) has further enriched the IPO market. The average listing gain for SME IPOs has escalated dramatically from a mere 2 per cent in 2019 to an impressive 74 per cent in 2024.
Vibrant equity market landscape
Meanwhile, mainboard IPOs have maintained a steady trajectory, with listing gains stabilising around 30 per cent since reaching their peak in 2020. These metrics highlight the increasing appetite for investment in both established companies and burgeoning SMEs, reflecting a diverse and vibrant equity market landscape.
A pivotal factor in this IPO boom is the positive performance of the Indian stock market itself. With the Nifty index rallying approximately 17 per cent and the Sensex seeing a rise of around 16 per cent since the beginning of 2024, the upward trajectory of these indices has provided a fertile ground for IPOs.
The underlying strength of the Indian economy has been a fundamental driver of this growth; the country’s GDP expanded at an impressive rate of 8.2 per cent in the fiscal year 2023-24, with expectations of continued growth at 7.2 per cent for the current financial year.
