#42 Indian Stock Markets established Global IPO leadership in 2024

India’s stock market narrative in 2024 tells a compelling story of growth, opportunity, and transformation. This year has seen Indian exchanges eclipse their counterparts across Asia, with record-breaking numbers in equity fundraising and IPO volume driven by robust investor sentiment, favorable market conditions, and a growing economy.

Understanding the driving forces behind this stellar performance is crucial for making informed decisions. Let’s breaks down the trends, key figures, and sectoral highlights of India’s IPO market in 2024 and try to assess what’s next.

The IPO Boom In India / India’s Dominance In IPO Activity

With high-profile listings such as Swiggy, FirstCry, Unicommerce and Hyundai Motor in 2024, India is now the world’s second-largest equity fundraising market, trailing only the US. The NSE has achieved a historic milestone, ranking as the number one venue for IPO listings globally by value, surpassing Nasdaq and the Hong Kong Stock Exchange. The numbers tell the story of this landmark year:

• With 337 IPOs across the Main boards and SME platforms, Indian exchanges outperformed major Asian markets, including Japan, Hong Kong, and Shanghai.

• While the United States reclaimed the top spot in IPO proceeds, India achieved a historic milestone by topping the global chart in IPO volume. With nearly double the number of IPOs listed compared to the US and two-and-a-half times more than Europe, India solidified its position as a leading player in the global capital market

• ₹1.8 lakh crore (~US$ 21.2 billion) raised in 2024 significantly surpassing the ₹57,600 crore (~US$ 6.8 billion) in 2023, and the previous high of ₹1.3 lakh crore (~US$ 15.3 billion) raised in 2021 in India. Notably, the NSE hosted the world’s third-largest IPO, a testament to the exchange’s growing appeal for multinational corporations. The momentum is expected to carry into 2025, with fund mobilization projected to breach the ₹2 lakh crore mark, setting yet another record. (Source: bfsi.economictimes )

Key factors fueling this boom include buoyant domestic stock prices (notwithstanding the recent downward trends since Oct 2024), strong investor sentiment, and very solid domestic fund flows, signaling the increasing democratization of investments in India. Households contributing more significantly to local equity markets have reshaped the landscape, making India an attractive venue for global equity offerings. This remarkable growth underscores the growing confidence in India’s capital markets, which continues to attract both institutional and retail investors.

Sectoral Diversity Defines 2024 - A Shift Away from Sectoral Concentration

One of the defining features of India’s IPO boom in 2024 was the sectoral diversity of offerings. Unlike earlier years, which saw a concentration of IPOs in a few industries, companies from 23 different industries accessed public markets for fundraising, reflecting the dynamic growth of India’s economy.

Key sectoral highlights include:

• Automobiles, Retail, Capital Goods & E-Commerce accounting for 59% of total issue size

• A significant presence of emerging sectors such as telecom and technology, highlighting India’s pivot towards innovation and digitization

This balanced distribution represents an evolution in the market, offering investors a wider array of opportunities.

Interestingly, this trend of diversification represents a significant departure from previous years. For instance:

• 2020 saw more 50% IPOs in BFSI, Healthcare, and Real Estate

• 2021 was largely driven by e-commerce, which was also aided by digital boom triggered by the pandemic through this period

The increasing sectoral representation underscores the alignment of India’s capital markets with its economic transformation.

Key Trends Driving India’s IPO Performance

A. Strong Domestic Investor Participation

The surge in India’s IPO activity can largely be attributed to strong domestic fund inflows. The participation of retail investors, driven by growing popularity of systematic investment plans (SIPs) & mutual funds, has played a pivotal role in powering the IPO market.

The net inflow received by mutual funds is ₹ 5.1 lakh crore (US$ 61.09 billion) in FY24 (till February). Assets managed by domestic mutual funds (MFs) grew by 34% in FY24, highest increase since 2016-17, driven by a strong equity market rally and substantial inflows.

B. Growth in retail investors and domestic funds in India

The above chart shows a notable change in investments, with increased participation from domestic institutional investors (DII) and foreign institutional investors (FII). DII investments rose from US$ 8.64 billion in FY19 to US$ 15.35 billion in FY24 (until January), while FII investments reached US$ 20.48 billion in the same period.

The above chart shows a notable change in investments, with increased participation from domestic institutional investors (DII) and foreign institutional investors (FII). DII investments rose from US$ 8.64 billion in FY19 to US$ 15.35 billion in FY24 (until January), while FII investments reached US$ 20.48 billion in the same period.

C. Resilient Macroeconomic Indicators

Indian economy remains the fastest growing major economy since 2022, and the Indian GDP will continue to grow projected at 6.5% for this fiscal year – providing a robust macroeconomic foundation for its capital markets. By the end of the decade, India is on track to become the 3rd largest economy by end of the decade, overtaking both Japan & Germany. This economic trajectory, combined with a resilient market environment, is expected to fuel continued growth in IPO activity.

D. The Rise of Multinational Listings

Multinational corporations like Hyundai Motors in 2024, LG Electronics (awaiting SEBI approval), Walmart’s PhonePe & Flipkart are increasingly turning to India’s stock exchanges for their equity offerings.

The growing participation of multinational corporations in Indian exchanges adds another dimension to the market’s evolution. Companies are increasingly recognizing the strategic advantages of listing in India

• Reduced Cost-efficiency (with lower capital costs compared to other global markets)

• Robust regulatory regime & framework (ensuring investor protection and market transparency)

• Cultural & Economic Diversity (providing access to one of the world’s largest consumer markets and a wide range of stakeholders), India has become a strategic destination for global IPOs

Notably, the world’s second-largest IPO in 2024—launched by a Korean automobile giant, Hyundai Motors with an IPO size of ~ ₹27500 Crores (US$ 3.3 billion) —was listed on the NSE, reinforcing India’s growing appeal. (Source: Business Standard)

Looking Ahead - A New Era for Indian Capital Markets – Set to become Deeper & More Diverse!

The year 2024 has been a transformative period for India’s IPO market, showcasing unprecedented growth, diversity, and resilience.

While the growth and evolution of India’s IPO market have quashed concerns about market depth and maturity, increasing participation of companies across diverse sectors and rise of smaller firms going public point to a more inclusive market. Furthermore, the booming investor sentiment and liquidity demonstrate a resilient landscape capable of weathering global uncertainties.

India as a Global Investment Hub

2024 marked a watershed moment for India’s capital markets solidifying its position on the global IPO stage coupled with sectoral diversification, strong domestic flows and a surge in multinational participation!

India’s ascendancy as a global IPO leader underscores the country’s potential as a key investment destination. Its transformation into a hub for multinational corporations provides a robust foundation for future growth, paving the way for sustained development.

Record Fund Mobilization Expected in 2025

Fund mobilization through IPOs is projected to reach new heights in 2025. According to analysts, around 65 companies are looking to get listed, currently awaiting SEBI nod, total amount to be raised in 2025 is expected to exceed ₹2 lakh crore (~US$ 23.5 billion), which would mark a new record in India’s capital markets. (Source: Business Standard)

Among the most awaited IPOs in 2025 are Ofbusiness, National Securities Depository (NSDL), Hexaware Technologies, Infra Market, Navi Technologies, HDB Financial Services, Ather energy, Ecom Express, LG Electronics India.

While major markets are witnessing volatility and corrections, the upcoming year is set to build on the momentum of 2024, offering significant opportunities for both issuers and investors in Indian equity market. This optimistic outlook is backed by continued domestic participation, resilient macroeconomic conditions, and a growing lineup of multinational IPOs. Looking ahead, robust macroeconomic environment and evolving market dynamics suggest that Indian IPO market is poised for sustained growth, paving way for a dynamic and inclusive capital market ecosystem.

~ Payal Punatar Doshi