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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.
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Business Standard
06-08-2025
- Business
- Business Standard
Should you buy, sell, hold interest rate sensitive stocks post RBI policy?
Shares of rate sensitive sectors traded weak in intrady deals on Wednesday with Nifty Realty and Nifty Auto index falling by up to 2 per cent. The fall came on the back of the Monetary Policy Committee (MPC) opting to leave the repo rate unchanged at 5.5 per cent. The committee also retained its 'neutral' policy stance. At 10:46 AM; Nifty Auto and Nifty Realty indices were down 0.72 per cent and 2.2 per cent, respectively. That said, Nifty PSU Bank, Nifty Private Bank and Nifty Bank index have outperformed the market, were down in the range of 0.09 per cent to 0.25 per cent. In comparison, Nifty 50 was down 0.35 per cent at 24,564. DLF, Prestige Estates Projects, Godrej Properties, Anant Raj, Lodha Developers, Brigade Enterprises and Oberoi Realty were down in the range of 1 per cent to 3 per cent on the National Stock Exchange (NSE) in intra-day trade. Bosch, Balkrishna Industries, Hero MotoCorp, Exide Industries, Ashok Leyland and Tube Investment of India from the Nifty Auto index were down between 1 per cent and 5 per cent. Should you buy, sell, hold rate sensitive stocks? Analysts believe the interest rate sensitive stocks are seeing a knee-jerk reaction to the MPC's move. Investors, they suggest, can look to buy these stocks on a decline from a long-term perspective, but should ensure valuation comfort and visibility in earnings before putting in their hard-earned money. "There is no need to panic. A pause in the rate cutting cycle was expected this time around. The RBI will resume the rate cutting cycle soon. The monsoon is on track, and the tariff war is also likely to be deflationary. All these should see the RBI cut rates soon. I expect 100 basis points (bps) of cut in interest rates before calendar year 2025 runs out," said G Chokkalingam, founder and head of research at Equinomics Research. Among the lot, he prefers public sector (PSU) bank stocks that have a stronger CASA (current account, savings account) compared to their private counterparts. "As regards real estate stocks, a few are still trading at very high price earnings (PE) multiples. One should remain selective here," he advises. Monetary policy statement Meanwhile, The Reserve Bank of India (RBI) in Monetary Policy statement said that the MPC noted that the inflation outlook in the near term has become more benign than anticipated earlier, and the average CPI inflation this year is expected to remain significantly below the target. Growth has held up well with some pick-up expected in the coming festive season and is evolving in line with MPC's assessment of 6.5 per cent for 2025-26. The global environment continues to be challenging. Although financial market volatility and geopolitical uncertainties have abated somewhat from their peaks in recent months, trade negotiation challenges continue to linger, MPC said in statement. Domestic growth remains resilient and is broadly evolving along the lines of MPC's assessment. Private consumption, aided by rural demand, and fixed investment, supported by buoyant government capex, continue to boost economic activity. The MPC's unanimous decision to keep the repo rate unchanged at 5.5 per cent even while reducing the CPI inflation forecast to 3.1 per cent for FY26 from 3.7 per cent earlier can be described as a 'dowish pause.' Downtrending inflating in the backdrop of good monsoon and Kharif sowing will keep inflation well anchored enabling the MPC to go for another rate cut in this rate cutting cycle. The RBI Governor's view that 'we are waiting for the transmission of front-loaded rate cut' is the right view under the present circumstances. This policy of dovish pause while continuing with the neutral policy stance is good for the banking and other rate sensitive sectors, said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Investments. 'Maintaining a 'neutral' stance signals optionality rather than indecision as the central bank is keeping policy nimble in case trade shocks escalate or if financial conditions tighten globally. Any fresh easing will now hinge not just on data but on the balance of risks between global trade retrenchment, domestic demand softening, and the rupee's trajectory. In this context, today's decision preserves both credibility and flexibility while acknowledging that we are in an uncertain world where macro policy must avoid both premature celebration and pre-emptive exhaustion,' said Arsh Mogre, Economist, PL Capital.
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Business Standard
29-07-2025
- Business
- Business Standard
NSDL IPO vs CDSL: Here's what key numbers reveal for investors
National Securities Depository IPO: The initial public offering (IPO) of securities depository National Securities Depository (NSDL) is scheduled to open for public subscription on Wednesday, July 30, 2025. The ₹4,011.6-crore public issue comprises an offer for sale (OFS) of 50.14 million equity shares, with no fresh issuance. IDBI Bank, National Stock Exchange of India, State Bank of India, Unit Trust of India, HDFC Bank, and Union Bank of India are the selling shareholders. NSDL has set a price band for its IPO in the range of ₹760 to ₹800. The lot for an application is 18 shares. A retail investor would require a minimum investment amount of ₹14,400 to bid for one lot at the upper end price. The IPO will close for bidding on Friday, August 1, 2025. Shares of NSDL will make their debut on the BSE, tentatively on Wednesday, August 6. Amid the buzz around the NSDL IPO, investors are closely watching its closest and only listed rival, Central Depository Services (CDSL). NSDL, at the upper end of the offer price, is valued at 46.6x as compared to 64.1x of CDSL on FY25 earnings. "It is worth noting that the premium valuation being enjoyed by CDSL is mainly because of its margin profile as compared to NSDL and its rising market share," according to a report by Equinomics Research. G Chokkalingam, founder and head of research at Equinomics Research, stated in the report that while CDSL appears superior to NSDL in terms of growth profile, the NSDL IPO may still offer tactical listing gains, given its considerable discount to CDSL at the upper end of the IPO price band. Hence, investors may consider subscribing to the issue for a possible tactical listing gain.
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.
Business Recorder
30-06-2025
- Business
- Business Recorder
India's equity benchmarks ease as financials retreat from record highs
India's benchmark indexes edged lower on Monday as profit-taking in financials near record highs outweighed optimism from easing geopolitical tensions and fresh foreign inflows. The Nifty 50 shed 0.19% to 25,590.45 points and the BSE Sensex fell 0.22% to 83,876.90 as of 10:14 a.m. IST. Seven of the 13 major sectors logged losses. High-weight financials, which hit a record high on Friday, lost 0.4%. The heaviest stock in the benchmark indexes HDFC Bank lost about 0.8%. Financials, metals lift Indian benchmarks to weekly gains as geopolitical, trade fears ease Meanwhile, small- and mid-cap indexes outperformed, rising 0.5% and 0.3%, respectively. Both the benchmarks are trading just about 2.5% below record high levels. They have gained about 3.5% in June, to take their overall rise to about 15% since the start of March. 'Many promoters, private equity funds and early foreign investors are likely booking profits as markets approach the record high levels and valuations get stretched, spurring a pause in the rally,' said G Chokkalingam, founder and head of research at Equinomics Research. Other Asian markets were also subdued, while the dollar softened on bets that weaker US jobs data could prompt deeper rate cuts. Among individual stocks, Karnataka Bank tumbled 7% after the chief executive officer Srikrishnan Hari Hara Sarma resigned citing personal reasons. Executive Director Sekhar Rao also stepped down. Torrent Pharma rose about 4% before paring most of the gains. The drug maker signed definitive agreements to buy a controlling 46.4% stake in JB Chemicals from private equity firm KKR at 1,600 rupees per share, a 11% discount to JB Chemicals' Friday close. On the flipside, Alembic Pharma jumped 9.5% after getting US drug regulator's nod for an injection used to treat certain types of cancer including ovarian cancer. ITD Cementation gained 4.1% after securing a $67.4 million international marine contract.
