ECM Newsletter: Indian Markets Stay Strong Despite Global Volatility

The RBI maintained the repo rate for the first time since May 2022, while the Fed raised its policy rate by 50 bps. Markets rallied as inflation eased, supported by FII inflows of INR 273 bn in June and a pickup in IPO activity that raised over INR 166 bn. However, FII outflows in October reflected uncertainty around US interest rates, and the Israel–Palestine conflict dampened global sentiment. Despite volatile FII flows, DIIs provided steady liquidity throughout the year. India’s share of global IPO proceeds reached an all-time high of 6%, behind the US (18%) and China (40%), while reduced listing timelines lowered market risk and drove stronger participation, with average IPO subscriptions at 27.5x.

Highlights

• Healthcare stocks witnessed interest from both FIIs, and DIIs driven by higher margins in hospitals and easing US price erosion in pharma companies.
• The financial services sector saw robust primary market activity, with companies raising growth capital, while market infrastructure as a theme continued to attract investor interest.
• ‘China + 1’ has furthered India’s position as the next global manufacturing hub. Govt. has also provided incentives through schemes such as Make in India, PLI, Indian Semiconductor Mission.
• We expect markets to experience previously unexplored sectors with companies in sectors like EV, SaaS, co working solutions, fintech to list in 2024.
• IPO pipeline expected to remain strong as companies hasten their listing plans to take advantage of buoyant markets, with inflows to support mid and large sized IPOs. We expect QIPs to continue in sectors such as industrial and financial services as companies tap growth capital and government schemes drive capex.