- India's equity fundraising surged 220% month-on-month despite IPO slowdown
- IPOs raised Rs 2,493 crore, while preferential allotments hit Rs 48,361 crore
- Sensex and Nifty rose over 6% in April, but derivatives volumes declined sharply
India's financial markets witnessed a massive divergence in capital-raising trends and institutional flows, according to the latest data from the market regulator. While primary market activity via IPOs cooled, overall equity fundraising skyrocketed, driven heavily by a multi-year high in corporate preferential allotments.
Capital Raising: Preferential Allotments Offset IPO Slump
Despite a sluggish IPO market, India Inc. successfully pivoted to alternative routes to secure capital. Overall equity fundraising saw a massive 220% month-on-month surge, standing in stark contrast to debt fundraising, which witnessed a steep 67% month-on-month decline.
Fundraising through initial public offerings stood at just Rs 2,493 crore, coming in sharply lower than in previous months. Filling the gap left by the IPO slowdown, preferential allotments jumped to Rs 48,361 crore, marking the highest level seen since 2018.
Market Momentum and Trading Volumes
The underlying market indices showed strong resilience, though derivative trading volumes saw a noticeable contraction. Both the Sensex and Nifty indices rose over 6% in an April rebound. While equity cash turnover witnessed a robust 36% rise year-on-year, speculative trading lost its momentum. Equity derivatives volumes fell between 15% and 23% month-on-month, and the currency derivatives turnover also experienced a significant drop, falling 24% over the same period.
Institutional Flows: Domestic Might vs. Foreign Flight
The SEBI data highlighted a continuing tug-of-war between domestic and foreign institutional investors. Supported by steady retail participation, domestic mutual fund Assets Under Management (AUM) rose 11% to reach a massive Rs 81.9 lakh crore. On the other hand, Foreign Portfolio Investors (FPIs) maintained a sustained selling trend, resulting in heavy market outflows of Rs 70,885 crore.
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