India's IPO market looks poised for a solid show in FY26: Key factors at play
However, the strength and momentum of the IPO market are closely aligned with the broader market sentiment. Bullish phases in the secondary markets typically coincide with a spike in IPO activity, while bearish trends often result in a slowdown in public offerings. In this article, we explore the current landscape and why the IPO market seems poised for a strong revival.
IPO market activity tends to move in tandem with the overall mood and direction of the secondary markets.
When investor sentiment is positive and equity indices are trending upward, companies gain confidence to raise capital via IPOs, FPOs, and other public issues.
On the other hand, when the market sentiment sours and volatility increases, the IPO market also experiences a sharp contraction in activity. Amount raised via public issues over the last few years.
For example, in Q3FY22, the Nifty 50 peaked near 18,000 before correcting sharply due to concerns about global inflation and the Russia-Ukraine conflict.
This market downturn triggered a slump in public issues, as companies turned cautious.
Later, as the secondary market rebounded and continued to post higher highs for four to six quarters, the IPO market also came back to life with a surge in IPO activity. IPO listing vs Nifty 50
Similarly, until September 2024, India's equity markets maintained strong bullish momentum, leading to record numbers of public issues.
However, a weakening macroeconomic environment in Q2FY25, i.e., post September 2024, combined with corporate earnings falling short of expectations, quickly reversed sentiment, resulting in a fresh lull in public market activity.
The market is showing signs of recovery now, and optimism about better growth prospects is growing.
This suggests that the period from March to May 2025 may have marked the bottom for IPO activity.
If the broader market continues to rise, the IPO market is also expected to pick up pace, similar to the strong activity seen between April and September 2024.
During FY25, a prolonged election cycle and softening consumer demand contributed to muted business performance across several sectors.
However, by Q4FY25, signs of recovery emerged, giving corporate India reasons to look ahead with renewed optimism.
Management commentary from listed companies has turned increasingly positive going into FY26 and FY27, supported by:
(i) Improving global macroeconomic conditions, including stable crude prices.
(ii) Expected Geopolitical stability, which boosts investor confidence.
(iii) Government-led CAPEX initiatives, such as massive investments in roads, railways, airports, ports, metros, trade corridors, and energy infrastructure. Government of India's Capex
In addition, the FY26 Union Budget's income tax cuts, estimated to inject nearly ₹ 1 lakh crore into the economy, are expected to stimulate household consumption.
These fiscal measures, along with improving business visibility, are setting the stage for India's next growth phase.
After a prolonged high-inflation period, conditions are now conducive for monetary easing. The Reserve Bank of India (RBI) has taken proactive steps to support growth:
(i) Repo rate cuts totalling 100 bps since February 2025.
(ii) CRR (Cash Reserve Ratio) reductions of 150 bps, bringing it back to pandemic-era levels to infuse liquidity. Inflation and RBI rate cut
These measures are designed to improve credit flow across the economy.
If inflation remains in check, there's ample room for further rate cuts, creating a fertile environment for economic expansion and, by extension, greater IPO market activity.
Amid all these developments, one constant has been the resilience of Indian retail investors. SIP inflows into mutual funds have remained strong, even as the market corrected nearly 18 per cent from its September 2024 peak.
This continued commitment to disciplined investing underscores the confidence of Indian households in long-term equity growth.
The growing retail participation, combined with sustained interest from institutional players such as mutual funds, PMSs, AIFs, and proprietary trading desks, indicates that substantial capital is available and poised for deployment.
With the right market environment, much of this capital will find its way into the IPO market either via fresh IPOs or follow-on offerings.
To capitalise on positive sentiment and robust liquidity, a large number of companies are gearing up to launch public issues in FY26:
(i) 72 IPOs already approved by SEBI, expected to raise nearly ₹ 1.4 lakh crore.
(ii) 68 additional IPOs pending approval, with an estimated fundraising potential of ₹ 1 lakh crore.
(iii) In total, nearly ₹ 2.4 lakh crore could be raised by 140 companies—up from ₹ 2.1 lakh crore by 105 companies in the previous fiscal year. Top upcoming IPOs in FY26
These offerings involve well-established companies, and if the market sentiment holds, they are likely to witness robust investor participation.
India's IPO market is entering a phase of renewed momentum, supported by improved macroeconomic stability, government-driven infrastructure investment, easing monetary policy by the RBI, and strong retail and institutional investor sentiment.
Retail investors' resilience even in times of correction indicates a strong foundational belief in India's long-term growth story.
This optimism is likely to spill over into the IPO market, making FY26 a potential record-breaking year for capital raising.
With a deep IPO pipeline and favorable economic tailwinds, the IPO market is set to become a vital engine for India's next phase of economic expansion.
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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of the expert, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
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