Funding via primary mkt surges, while secondary mkt funding slows in 2024

The year 2024 will be remembered as a historic one for the primary market. It saw a record number of initial public offerings (IPOs), both on the mainboard and in the small and midsized enterprise (SME) segment.

 

Fundraising through the qualified institutional placement (QIP) route surpassed Rs 1 trillion for the first time, while share sales by private equity funds and promoters in listed companies via block deals also reached an all-time high of over Rs 6 trillion. The spike in volatility in the secondary markets did little to dent the momentum in the primary market.

 

India’s market capitalisation (mcap) rose by Rs 77.7 trillion to Rs 442 trillion during the year. New listings contributed more than 3 per cent to the mcap. The mainboard saw over 91 IPOs that collectively mopped up Rs 1.6 trillion, breaching the previous record tally of Rs 1.19 trillion in 2021.

 

The year also witnessed the biggest-ever IPO of Hyundai Motor India at Rs 27,870 crore. On the SME side, 240 companies raised close to Rs 8,800 crore. Over 70 listed companies raised Rs 1.13 trillion through the QIP route. Vedanta, Zomato, and Adani Energy Solutions each raised over $1 billion in fresh capital via this route.

 

Meanwhile, the secondary markets clocked their ninth annual gain. The Sensex posted a gain of 8.2 per cent in 2024, while the Nifty rose by 8.8 per cent. Broader market indices, Nifty Midcap 100 and Nifty Smallcap 100, performed better, registering gains of 24 per cent. However, the returns for all these indices were half of those in 2023.

 

Net flows from domestic institutional investors crossed Rs 5 trillion for the first time during a calendar year. Over Rs 4 trillion of these flows came from domestic mutual funds. Overall, foreign portfolio investor (FPI) flows slowed to a trickle at less than Rs 3,000 crore compared to Rs 1.74 trillion in 2023. However, FPIs pumped in over Rs 1.1 trillion into the primary markets — mainly IPOs and QIPs.

 

Pharmaceutical, real estate, and automotive were the best-performing sectors, while the fast-moving consumer goods pack disappointed. Mahindra & Mahindra, Bharat Electronics, and Bharti Airtel were the best-performing Nifty stocks, while IndusInd Bank and Asian Paints were the worst performers.

 

The 10-year US Treasury started the year at 3.88 per cent and ended 2024 at 4.51 per cent, as the US Federal Reserve scaled back forecasts for interest rate cuts in 2025 due to the inflation threat. Domestic yields softened during the year, declining from 7.17 per cent at the start of the year to 6.76 per cent.