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Mint
6 days ago
- Business
- Mint
Should Indian stock market investors be worried about the IPO boom? Explained
The Indian primary market is on fire. 2025 has already seen a record number of filings, blockbuster listings, and frenzied investor interest across both mainboard and SME initial public offerings (IPOs). Not only have they caught retail investor interest, but the IPO euphoria is also visible in the investment trends of the institutional investors. Till July 2025, 163 public offerings have hit the market, looking to raise ₹ 67,000 crore, according to Prime Database. In August, too, there is no slowdown in the number of offerings, with many big names like JSW Cement, having accessed the IPO market and a few more lined up. G Chokkalingam, Founder, Equinomics Research, explained that the lure of strong listing gains, higher allocation by institutions and retail investors, along with a greater share of offerings from sectors not impacted by the US tariffs, is powering the IPO boom. However, as IPO-bound companies soak up massive capital inflows, especially from FPIs and mutual funds, questions are emerging: Is this IPO boom weighing down the broader market? Are the bulls in the secondary market being kept in check? And what are its implications for the Indian stock market? According to analysts, while IPOs are siphoning liquidity away from the secondary market, the primary market boom is an important feature and a necessary development. Chokkalingam said that a robust IPO market is certainly contributing to the weakness we are seeing in the secondary market. Liquidity at any point in time is limited, he explained, adding that the IPO market competes with the liquidity that would otherwise chase the secondary market and is one of the reasons pressuring the stock market bulls. There has been a record IPO filing in both the mainboard and SME segments, along with bearish flows by FPIs in the secondary markets. FPIs have preferred the IPO market over the secondary market in 2025 as they have pulled out around $17.4 billion from listed equities and invested $4.37 billion in the primary market. The mutual fund industry also demonstrated strong participation in newly-listed companies during the quarter ended June 2025, with total investments exceeding ₹ 5,294 crore across recent IPOs. Vaqarjaved Khan, CFA, Sr. Fundamental Analyst, Angel One, said a strong IPO pipeline can pressurise secondary markets as liquidity diversion for marquee investors tends to happen as they often sell existing holdings to raise cash for attractively priced IPOs. This is more pronounced when IPOs are bunched together and large in size, and the investment window is small, Khan said. There tends to be a valuation reset as well if companies in the primary market are better priced than their listed counterparts, said Khan. This, he believes, results in de-rating in the secondary markets. Sharing a contrasting view, Harshal Dasani, Business Head at INVasset, said that while short-term market momentum may face occasional pressure, in the long run, a steady flow of quality listings strengthens market breadth, price discovery, and overall stability. "With SIP inflows exceeding ₹ 28,000 crore a month and mutual fund AUM at record highs, India is awash with investable capital. If fresh supply through listings dries up, this relentless flow would be forced into a limited set of existing stocks, inflating valuations and creating bubble-like conditions," he added. This isn't the first time India's markets have danced to this tune. 'Over the last 30 years, we've repeatedly seen a pattern: first a secondary market boom, followed by an IPO boom, and then a correction,' said Chokkalingam. According to Chokkalingam, the eventual correction — often prolonged — begins once liquidity tightens and valuations lose support. 'Corrections usually last six months to three years. What brings the market back is time, bottom-fishing, improving valuations, and fresh inflows.' However, what can eventually pull the Indian stock market bulls out of slumber is the resolution of the US-India trade deal and any rate cuts by the US Federal Reserve. "On the domestic front, SIP and domestic flows continue to remain strong. Strong quarterly results from heavyweight sectors, coupled with higher liquidity, will then boost Indian equities and take it out of consolidation," Khan said. Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, 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.
Mint
7 days ago
- Business
- Mint
Sectoral fund inflows soar 1,882% MoM: A smart move or costly mistake by Indian retail investors amid Trump tariff war?
The retail investors seemed to be gung-ho on the Indian stock market despite the threat of a tariff war as they ploughed in a record ₹ 42,702 crore in July, making it the highest-ever monthly tally for the segment and a sharp 81% surge. The sectoral funds, grabbing the highest 15% share, recorded a whopping 1,882% increase month-on-month. The small-cap category recorded a 61% MOM growth to ₹ 6,484 crore, and commanded 10% of the overall inflows. This retail investor behaviour demonstrated both the strong attraction of past performance as well as the willingness to take risks. But is this a wise strategy for investors as tariffs unleashed by Donald Trump threaten to derail the Indian stock market? Taking historical data into consideration, analysts do not believe that it's a wise decision — especially for retail investors — to take concentrated positions in sectoral funds. Dr VK Vijayakumar said that while robust equity fund flows reflect the optimism of retail investors, the inflows into sectoral funds are signalling an unhealthy trend. "We know from experience that in the long run, thematic funds underperform. Not only do they underperform, but they're also highly risky," Dr Vijayakumar said. The newbies who have flocked into the market after the COVID crash are totally unaware of these market nuances, and that explains the inflows in this segment, he added. The last one-year returns of funds in the sectoral and thematic categories range from 19% to -17%, signalling that not all sectors perform equally. There are always outperforming sectors, neutral ones, and underperforming sectors. Echoing similar views, Ajit Mishra, SVP-Research, Religare Broking, said that sectoral funds are highly risky and if a particular sector takes a hit, it becomes very difficult to manage those positions. "We've seen such cases in the past with sectors like IT and pharma. Both underperformed for long periods, and IT is still facing pressure. So clearly, it's not a great strategy for retail investors. It should be more of a balanced approach," he advised. He explained that sometimes, people take short-term tactical positions —say, in defence-related stocks. But it's not a sound strategy for retail investors. However, amid Trump's tariff tantrum, G Chokkalingam, Founder of Equinomics Research, believes a sectoral approach is more relevant than ever. While sector-based investing has always mattered due to uneven performance across industries, this time, unique macro and domestic factors make it critical, he said. What makes this time different? Chokkalingam pointed to two key reasons: Trade War Impact: 'We haven't seen a global trade war of this scale in the last two to three decades,' he said. The implications are deeply sector-specific. For instance, textiles are among the worst-hit, followed by gems and jewellery. While US tariff hikes are broadly applied (25% across the board), for emerging markets like India, only select sectors—such as textiles and pharma—face the brunt. Shifting Domestic Trends: On the home front, traditionally defensive sectors like FMCG are faltering. Once a safe haven during downturns (even during the Lehman crisis), FMCG now shows consistent underperformance. Similarly, the auto sector is largely flat across segments, barring a few exceptions like M&M's tractor division. Two-wheelers and other categories continue to struggle with low growth. "Therefore, I believe mutual funds launching sectoral schemes are being smart, and investors opting for them are also quite aware of the current dynamics," Chokkalingam opined. However, he also advised against putting all your funds into one category. "If investors choose sector funds, they must diversify within the equity asset class. Unless they're professionals or have very high risk appetite, they should not allocate a major chunk of their equity investment to one sector," he advised. Don't put 50–100% of your equity portfolio in one sector fund, limit it to 15–20%, unless you have an extremely high risk tolerance, he said. Now, the question remains with Trump's massive tariffs on India (25% already in effect and another 25% to come into effect later this month on August 27), if Indian equity inflows can hold ground. Ajit Mishra of Religare said that last month, inflows were more of FOMO factor. "By June, we were talking about the market hitting new highs, and in July, that sentiment carried over. So yes, this could be a classic case of FOM, especially in small caps. Investors probably felt like they were missing the bus. But now, with earnings coming in, the reality is setting in. You could see some moderation in the numbers — particularly in the small- and mid-cap segments. Ultimately, earnings performance will drive the narrative," he said. However, Sunil Subramaniam, stock market veteran, believes strong buying support in equities will continue in August as nearly ₹ 57,000 crore (assuming 65% of Hybrid and 80% of Passives is in Equities) will be available to mutual funds to defend our market against the fluctuating FII behaviour. Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, 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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Business Standard
31-07-2025
- Business
- Business Standard
Nifty, Sensex recover from Trump tariff blow; Here's what drove the rebound
Indian stock markets shrugged off major losses after opening nearly 1 per cent lower on Thursday after US President Donald Trump slapped the country with a 25 per cent tariff. The Nifty50 fell as much as 220 points or 0.89 per cent to 24,635, while the Sensex fell 789 points or 0.97 per cent to 80,695. The midcap and the small-cap indices fell by 1.47 per cent and 1.59 per cent, respectively. Sectors from textile, auto, and oil and gas plunged on Thursday. However, as of 1:00 PM, both the Nifty and Sensex recouped all losses and were trading 0.18 per cent higher. Nifty Midcap and small-cap indices recovered some losses to trade 0.48 per cent and 0.33 per cent higher. The market breadth was, however, in favour of bears with 2,217 stocks declining on Thursday, on the BSE. 1,600 stocks advanced, while 175 remained unchanged. FOLLOW STOCK MARKET TODAY LIVE UPDATES Trump said that India has tariffs that are 'among the highest in the World," and are the most "strenuous and obnoxious non-monetary trade barriers of any country." He further threatened additional penalties over India's energy purchases from Russia. What led the market recovery? Market experts say the recovery was driven by a combination of limited macroeconomic impact, strong domestic buying, and hopes for further trade negotiations. "The bounce-back came sooner than many thought," G Chokkalingam, founder and chief investment officer at Equinomics Research, said. "The key reason is that India's goods exports to the US account for just 2 per cent of GDP. Even within overall exports, the US share is around 20 per cent, and not all of it will be affected." Another crucial factor supporting the recovery is that the US tariffs currently target only goods, not services, Chokkalingam said. "The IT sector, which is a major pillar of India's export economy, hasn't been touched. If that were to change, markets would be far more concerned. For now, the risk is contained." Experts also pointed to continued buying by domestic institutional investors (DIIs), who have been stepping in to support the market. Further, there is also growing hope that the 25 per cent tariff may not be the final word, Chokkalingam said. From a longer-term perspective, Indian economic fundamentals remain intact and current tariffs are unlikely to impact the country's overall growth trajectory, Bathini said. With strong liquidity in the system and a steady inflow of SIP (Systematic Investment Plan) money, domestic institutions have been actively buying over a series of sessions, he added. ALSO READ:
Business Recorder
16-07-2025
- Business
- Business Recorder
India equity benchmarks rise as soft inflation data fuels RBI rate cut bets
MUMBAI: India's equity benchmarks snapped a four-session losing streak on Tuesday, as lower-than-expected domestic inflation data boosted expectations of further rate cuts this year by the central bank. The Nifty 50 closed 0.45% higher at 25,195.80 points and the BSE Sensex added 0.39% to 82,570.91. The blue-chip indexes fell 1.7% in the past four sessions. All the 13 major sectors rose on the day. The broader mid- and small-caps added about 1% each. The short-term outlook of the domestic equity market looks robust considering favourable headline inflation, robust monsoon and prospects of a demand revival, said G Chokkalingam, founder and head of research at Equinomics Research. Domestic annual retail inflation slowed to a more than six-year low of 2.10% in June, near the lower range of the Reserve Bank of India's tolerance band, as food prices continued to ease, making a case for further interest rate cuts. Nomura expects 25 bps cuts in each of the RBI's October and December policy meetings, and also expects banking system liquidity to be kept in a surplus for effective monetary policy transmission. Equinomics' Chokkalingam said any adverse move on the US tariff front is the only key risk factor for Indian markets at the moment. Investor focus will now be on US inflation data, due later in the day, to assess the Federal Reserve's future rate action. Among individual stocks, Sun Pharmaceuticals rose 2.7%, as the launch of its anti-baldness drug Leqselvi in the US was expected to boost sales. Yes Bank gained 2.4% after Bloomberg News reported that Japan's Sumitomo Mitsui Financial Group is eyeing $1.1 billion investment in the private lender to buy an additional 5% stake. Bucking the broader trend, HCLTech dropped 3.3% and was the biggest loser among Nifty 50 and IT companies after India's No. 3 IT exporter reported lower-than-expected quarterly profit and lowered its annual margin forecast.
Hans India
14-07-2025
- Business
- Hans India
Top 5 triggers behind Sensex's 1,459 point fall in just 4 days!
The Indian stock market has faced a sharp four-day decline, with the Sensex tumbling 1,459 points (1.74%) to close at 82,253.46 on July 14. The Nifty 50 followed suit, shedding 1.72% to settle at 25,082.30—dropping below the critical 25,100 mark. In contrast, BSE Midcap and Smallcap indices defied the trend, rising 0.67% and 0.57%, respectively, on Monday. So, why is the market falling? Here are five major reasons: 1. Trade War Tensions Global sentiment took a hit after U.S. President Donald Trump ramped up tariffs—35% on Canadian imports and 30% on goods from Mexico and the EU, effective August 1. While there's talk of a US-India interim trade deal with tariffs under 20%, uncertainty around it is creating nervousness in the market. "Any delay or disappointment in a US-India deal could further dampen market sentiment," says VK Vijayakumar, Chief Investment Strategist, Geojit Financial. 2. Shift Toward Mid and Small-Caps Retail investors are gravitating toward mid- and small-cap stocks, eyeing faster growth and better valuations. With over 22 crore registered investors in India and six lakh new entrants weekly, this segment has become the new hotspot. 'The broader markets could continue to outperform in the near term,' notes G. Chokkalingam of Equinomics Research. 3. FPI Selling Pressure After four months of consistent inflows, foreign investors have turned net sellers, offloading over ₹10,000 crore worth of equities in July (till the 11th). Since FPIs hold large positions in blue-chip stocks, this has directly impacted the benchmarks. 4. High Valuation Concerns The Nifty 50's PE ratio is currently 22.6—above its 1-year average of 22.2. With Q1 earnings expected to be mixed and stronger growth projected only by Q3 FY26, investors are wary of stretched valuations. 5. Technical Weakness Experts point to key resistance and support levels being breached. Kotak Securities' Shrikant Chouhan believes the markets may slide further toward 81,200 unless the Sensex crosses 83,200 and Nifty breaches 25,350 convincingly. LKP Securities' Rupak De warns that a drop below the 24,900 level on the Nifty could signal a deeper correction phase. 📉 In Summary: A combination of global trade concerns, shifting investor focus, FPI exits, overvalued benchmarks, and technical signals are driving the market down. While mid- and small-caps are holding firm for now, the broader trend suggests caution ahead unless key support levels hold.
