Synopsis
Indian markets are projected to see around 1,000 IPOs in the next two years due to rising consumption and strong GDP growth, according to a recent report.Key Takeaways
- Anticipation of 1,000 IPOs in two years.
- Strong GDP growth and consumption driving the market.
- 70% of IPOs underpriced initially.
- Market liquidity affected by large IPOs.
- Investment opportunities arise with new IPOs.
Bengaluru, Feb 21 (NationPress) With increasing consumption levels and robust GDP growth, Indian stock markets are anticipated to experience around 1,000 initial public offerings (IPOs) within the upcoming two years, according to a report released on Friday.
The IPO landscape is poised for an engaging year in 2025. This surge in public offerings signifies the significant expansion of India’s capital markets, presenting thrilling investment prospects.
The report from Niveshaay Investment Advisors, a smallcase manager, states that rising consumption and overall economic advancement will keep the IPO market highly active.
The allure of IPOs frequently draws the attention of both institutional and retail investors eager to seize potential early-stage profits.
Nevertheless, the pricing of an IPO is vital in influencing its performance after listing. While certain IPOs yield considerable listing gains, others may falter in maintaining their issue price.
During bullish market trends, companies often achieve elevated valuations, which can result in inflated pricing. Conversely, during bearish periods, IPOs might be priced more conservatively, which can offer better entry points, as stated in the report.
Considering the substantial effect of liquidity on market behavior, investors should meticulously evaluate liquidity risks when engaging with large IPO events.
A strategic allocation approach is essential for ensuring that capital is utilized effectively, balancing participation in new opportunities while reducing potential disturbances in the secondary market, according to the report.
Arvind Kothari, a smallcase manager and founder of Niveshaay, remarked that research indicates over 70 percent of Indian IPOs are typically underpriced at first, providing favorable short-term returns.
“However, these returns frequently do not hold over the long term, particularly when compared to broader market indices. Acknowledging this performance gap, we identify a distinctive opportunity to generate value,” he stated.
While sizable IPOs present appealing investment avenues, they also influence overall market liquidity by consuming capital that would typically flow within the secondary market.
“When institutional and retail investors channel funds into a significant IPO, liquidity is redirected from existing stocks, especially in the mid and small-cap sectors, resulting in short-term corrections and price volatility,” the report highlighted.
