Global Funds' Record Primary Market Inflows In 2024 Offsets Setback In Stocks

Fundraising by India Inc. in the primary market this year broke records on multiple fronts, mostly triggered by the all-time high inflows seen in the space by global funds. The net inflow of foreign investors in India's stock market is driven by primary market participation.

So far in 2024, foreign funds have bought shares worth Rs 1,656 crore, according to data from the National Securities Depository Ltd. This year saw a record Rs 1.2 lakh crore inflows in the primary market space by the global fund when they pulled out stocks worth Rs 1.19 lakh crore in the secondary market.

During the same time, domestic local funds have invested Rs 1.12 lakh crore, indicating the rising interest among retail investors to capitalise in the booming stock market.

Domestic firms raised a record Rs 1.64 lakh crore via 90 maiden public issues with an already strong pipeline for the upcoming year.

This year's initial public offerings also saw the country’s biggest-ever listing, with Hyundai Motor Co.’s local unit raising Rs 27,870.1 crore.

Further, the IPO subscription ratios have been exceptionally high this year with Vibhor Steel Tubes Ltd. seeing an impressive subscription of 320 times. Offerings of KRN Heat Exchanger and Refrigeration, Manba Finance, and Gala Precision Engineering were each subscribed over 200 times. Multiple issues were subscribed more than 100 times this year.

According to Morgan Stanley, flows into domestic equity mutual funds rose further, with systematic investing plan flows rising to $3 billion per month in the last quarter of 2024. Equity issuances rose sharply in 2024 to 0.8% of market cap versus 0.5% in 2023, the brokerage said.

The major IPOs in 2025 include those to be launched by LG Electronics India Pvt., Tata Capital Ltd., Ather Energy Ltd., Zepto (operated by Kiranakart Technologies Pvt.), BlueStone Jewellery and Lifestyle Pvt., and Anand Rathi Share and Stock Brokers Ltd., among others.

The benchmark index Nifty 50 and the 30-stock Sensex are set to close 2024 with gains of nearly 8.8% and 8.3%, respectively. This makes it nearly 50% below the gains made in the previous year.

Sensex made a new high in 8 out of 12 months in 2024 and the maximum drawdown from the peaks stood at about 11%, compared to 10% in 2023, Morgan Stanley said in a year wrap note. "Mid- and Small cap indices outperformed the Sensex by 16ppts and 19ppts, respectively."

Market volatility rose from multiyear lows after having declined for the three consecutive years prior to 2024, it said.