look news india
Once again a bumper bullish phase is being seen in the primary market of the Indian stock market. Despite global economic uncertainties and ongoing fluctuations in the secondary market, investors betting on new IPOs (Initial Public Offerings) have received excellent returns. According to the recent Market Analytics report, out of 23 major companies listed on the Mainboard, 20 companies have made investors rich by giving positive and strong returns compared to their issue price. This excellent strike rate of the primary market is further strengthening the unwavering confidence of retail investors.
Record participation of retail investors becomes new strength
The Indian stock market, traditionally dependent on foreign portfolio investors (FPIs), is now driven by strong capital from domestic investors.
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Strong subscription figures: In almost every quality IPO, the retail portion is being oversubscribed many times over.
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Monthly SIP and Demat Details: SIP inflows of over ₹30,000 crore every month across the country and record number of new demat accounts being opened have created a strong base of liquidity.
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Focus on listing gains: New investors are increasing their stake in IPOs not just for short-term listing gains but also for long-term wealth creation in fundamentally strong companies.
Why did 20 out of 23 companies make bumper profits?
According to market experts, the biggest reason behind this success is the ‘reasonable pricing’ (attractive valuation) being done by the companies and the increasing number of profit-after-tax (PAT) positive companies. Whereas earlier unprofitable new-age tech companies at extremely expensive valuations used to enter the market, now priority is being given to traditional and modern manufacturing, healthcare, consumer and EPC companies with strong cash flows, clear business models and better corporate governance. This is the reason why more than 85% of the stocks have increased with investors’ capital remaining safe on the day of listing and even after that.
IPO revolution coming from Tier-2 and Tier-3 cities
This craze of investing in IPO is not limited only to Mumbai, Delhi-NCR and Bengaluru. Young and retail investors from tier-2 and tier-3 cities like Lucknow, Kanpur, Varanasi in Uttar Pradesh, Patna in Bihar, Jaipur in Rajasthan, Indore in Madhya Pradesh and Ahmedabad and Surat in Gujarat are participating in IPO bidding on a large scale through digital broking apps and UPI (UPI Mandate). Financial awareness at the local level and research data available in Hindi has connected investors from small towns to the mainstream of the stock market.
Many mega IPOs are lined up in the coming months
This strength of the primary market is likely to gain further momentum in the coming quarters. Draft papers of more than 200 companies are ready in the pipeline of SEBI. Along with this, National Stock Exchange (NSE), Zepto, SBI Mutual Fund and other big unicorns are also preparing to launch their public issues.
(Disclaimer: Investing in IPOs and stock markets is subject to market risks. Before applying in any public issue, please consult the company’s Red Herring Prospectus (RHP) and advice from financial advisors.)