India’s capital markets are transitioning from a pure capital-raising platform to a valuation discovery engine, driven by strong domestic liquidity, sustained investor participation and a robust IPO pipeline, according to a capital markets outlook report by Uniqus Consultech, in partnership with the Indian Venture and Alternate Capital Association.
The report noted that India’s equity market capitalisation stood at about $5.2 trillion in 2025, reinforcing the country’s position as one of the most resilient global capital markets despite global volatility.
A key structural shift has been the growing dominance of domestic investors, with domestic institutional investors (DIIs) now holding more equities than foreign institutional investors (FIIs) for the first time.
India’s IPO market remained active in 2025, with companies raising ₹1.76 lakh crore, a 10 per cent increase from the previous year. However, the composition of fundraising indicates a shift in strategy: about 63–64 per cent of proceeds came from offer-for-sale (OFS) components, reflecting promoter monetisation at favourable valuations rather than fresh capital infusion. Primary issuances accounted for roughly 37 per cent of proceeds.
Where fresh capital was raised, companies largely prioritised balance-sheet strengthening. Around 32 per cent of IPO proceeds were used for working capital, 27 per cent for debt repayment and 18 per cent for capital expenditure, suggesting a focus on financial stability and operational resilience rather than aggressive expansion.
Despite moderating debut performances, investor appetite remained strong. Average listing gains dropped sharply to about 10 per cent in 2025 from around 30per cent in 2024, signalling more rational pricing, though overall subscription levels remained robust with strong participation from institutional and high-net-worth investors.
Sectorally, financial services, technology platforms and consumer-focused businesses led IPO activity, while the year also saw a resurgence of multinational listings. The listing of global brands such as Hyundai Motor India and LG Electronics India highlighted a broader trend of foreign companies considering India listings not merely for capital but to unlock valuation premiums available in Indian markets.
The report also highlights the growing influence of domestic capital in stabilising the market. DII ownership in listed companies has risen from about 13.6 per cent in 2020 to nearly 19 per cent in 2025, overtaking FIIs whose share has declined to roughly 16.6 per cent, reflecting increasing financialisation of household savings through mutual funds and insurance products.
Looking ahead, the pipeline remains strong, with around 200 draft IPO documents filed with the market regulator representing potential issuance of over ₹1.8 lakh crore, indicating that 2026 could witness a deeper and broader IPO cycle anchored by domestic liquidity and structural growth expectations.
Source: The Hindu Business Line
