 "BFSI Summit: Domestic liquidity powering IPO and equity boom, say bankers")
India’s equity capital markets are entering a new phase of maturity, fuelled by rising domestic liquidity, pragmatic valuations, and a steady flow of public offerings. At a panel discussion on 'Deepening India’s Equity Capital Markets' on day 1 of Business Standard BFSI Insight Summit 2025, leading bankers noted that India’s growing self-reliance in capital formation is reshaping fundraising dynamics.
Financialisation fuels primary market growth
According to Sonia Dasgupta, MD & CEO, Investment Banking, JM Financial, India’s financialisation of savings has been transformational. “Since 2020, we have seen equities, mutual funds and other savings instruments grow from 3 per cent to nearly 17 per cent. That reflects a massive pool of domestic demand,” she said.
According to Dasgupta, this surge has enabled a lot of repricing in the secondary market and layered a vibrant phase of primary market activity. The rise of digital technology and early-stage investors realising their companies are ready to list has also contributed, she said.
“Many new-age firms have delivered returns, encouraging others to take that risk and list. The ease of moving money has smoothed the rails for larger issuances,” she added.
Reduced dependence on foreign capital
According to Gesu Kaushal, MD and co-head, Equity Corporate Finance, Kotak Mahindra Capital, India’s market buoyancy stems from a stable macroeconomic environment and the rise of large domestic pools of capital. “Our dependence on foreign portfolio investors has reduced,” he said.
Kaushal added that process efficiency has improved retail participation dramatically. “For IPOs, the ease of investing has played a huge role. About 70 per cent of retail investors now apply through UPI, leading to far more applicants than before,” he noted.
Domestic institutions lead the charge
The deepening of local markets has also been enabled by stronger institutional capabilities. Sunil Khaitan, MD and head of financing, Goldman Sachs India, said domestic mutual funds and institutions now have the “capital and intellectual ability” to back innovative business models. “They get listed and trade very well here,” he said.
Khaitan identified three key drivers of market activity - growth equity, monetisation, and balance sheet repair. “It is in the issuer’s interest that IPOs are priced well, as they remain large shareholders in the listed entity,” he said.
However, he cautioned that some investors treat IPOs as an asset class, investing without due diligence, which “increases the chances of losses".
MNC listings reflect market maturity
Amitabh Malhotra, vice-chairman, Capital Markets and Advisory, HSBC India, said multinational corporations are also recognising India’s market maturity. “Earlier, MNCs preferred to list in their home markets. But their Indian subsidiaries have now gained scale, and the Indian equity market offers visibility and brand identity,” he said.
Malhotra added that greater domestic participation has created “a balance between issuers, bankers and investors.” Valuations, he noted, are becoming “more pragmatic, with investors now asking for a certain level of discount.”