India’s equity capital market is heading for its best month on record, bucking a lackluster stock market as ample domestic liquidity continues to fuel demand for new shares.
Almost $10 billion of deals have been priced in August, led by the government’s blockbuster $3.2 billion sale of shares in Life Insurance Corp. of India. Manipal Health Enterprises Ltd.’s $958 million initial public offering, alongside a flurry of block trades and institutional placements, boosted the tally.
The record dealmaking has been driven by the growing heft of India’s local mutual funds and insurers, strong participation by retail investors and the return of global funds, factors that are boosting the market’s ability to absorb large offerings. That strength could provide the momentum for major offerings expected later this year from the National Stock Exchange of India Ltd. and Jio Platforms Ltd.
The buoyancy contrasts with the subdued performance of the nation’s $5.1 trillion secondary market, which remains among the region’s laggards this year. While the benchmark NSE Nifty 50 Index is little changed from its level two years ago, investors have snapped up new listings. All but four of the 24 companies that debuted in August are trading above their IPO prices.
“Companies have overcome hesitancy caused by the trade tantrum and war in the Middle East,” said Sunil Shah, group chief executive of Mumbai-based Khambatta Securities Ltd. Some issuers even accepted lower valuations to get their deals over the finish line, he added.
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