December 2024 has etched itself into the history of India’s capital markets, with a remarkable 15 IPOs listed on the mainboard in just 21 working days. This unprecedented activity caps a landmark year for Indian capital markets, showcasing their robustness and ever-expanding appeal to investors.
A strong year for IPOs and market growth
The calendar year 2024 (CY24) witnessed 90 mainboard IPOs—a 50% year-on-year increase—raising an impressive USD 20 billion in issue size. This contributed an estimated USD 200 billion to India’s overall market capitalization. Alongside IPOs, newer asset classes such as REITs, InvITs, and corporate bonds have further diversified the financial ecosystem, strengthening India’s market landscape.
Fundraising through Qualified Institutional Placements (QIPs) also hit a record high, with 93 companies raising USD 16.4 billion, marking a 132% increase compared to 2023. These figures underscore the growing confidence in India’s capital markets as a vibrant space for investment and innovation.
Sustainable growth or temporary spike?
The Indian stock market’s current capitalization stands at USD 5.2 trillion, with expectations to grow by over USD 1 trillion annually, driven by robust IPO activity, QIPs, and expanding asset classes. Trading volumes and values have also surged, rising by 55% and 81%, respectively, over the past three years.
With anticipated earnings growth of 15% for the next year, India is poised to secure its position among the top three largest stock markets globally. Experts believe this surge is not a one-off phenomenon but a new normal, signaling a long-term trend of growth and resilience.
Challenges amid progress
While the momentum is undeniable, proposed amendments to regulations for Merchant Bankers (MBs) could impact market dynamics. Higher net worth and liquidity requirements, along with restricted activities for MBs, might reduce competition, increase costs for smaller players, and lead to market consolidation.
Regulations need to strike a delicate balance, ensuring oversight while maintaining inclusivity for both large and small market participants. Such an approach would sustain the vibrancy of India’s financial ecosystem.
The road ahead
As December sets a new benchmark and CY24 concludes on a historic note, India’s capital markets are gearing up for an even brighter future. With strategic adjustments and continued growth, India is not just participating in the global capital market but leading the charge into a new era of economic excellence.
