India's IPO Market Soars as Domestic Investors Power Record-Breaking Offerings

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The Indian Initial Public Offering (IPO) market is undergoing a rapid change and has already positioned itself as one of the most dynamic listing platforms globally. The growth is fundamentally facilitated by a massive structural shift: increasing dominance of domestic capital. This sudden IPO boom, with total proceeds racing towards last year's $21 billion peak, is reshaping India's capital market. 

The Structural Shift: India's New Investor Base

The driving force behind the recent IPOs is the fast-growing domestic investments. Statistics highlight that both institutional and individual investors have collectively committed more than Rs. 979 billion to IPOs since 2024. This is well ahead of the foreign funds' investment of Rs. 790 billion.

The percentage of domestic investment in primary share offerings has increased to around 75% in 2025, the highest in any given year when overall proceeds exceeded Rs. 1 trillion. This growth is supported by various factors, including the use of mobile trading platforms, simple account opening processes, and the spread of investment information on social media.

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This accessibility has brought millions of first-time share investors on board, many of whom are channeling billions of dollars into domestic mutual funds through monthly recurring plans. This surge in domestic capital is building a strong, self-reinforcing foundation of demand, decreasing market sensitivity to foreign funds, even during high foreign outflows from the secondary market.

Frothy Valuations and the Risk of Correction

While the growing dominance of domestic capital signals market maturity, excessive optimism has its own risks. Market experts have warned of extreme valuations for some new listings, a pattern that has been compared by some analysts to the Chinese market ten years ago. Subscription rates on most small IPOs often exceed 100 times, which can be an indication of speculation and potentially unsustainable conditions.

This flimsy mood is especially worrying considering Indian IPOs have collectively posted a weighted average return of 18% this year, ahead of the benchmark NSE Nifty 50 Index's 9.7% gain.

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However, the figures also show that almost half of the new issuances on both top and junior boards are now trading below their original IPO price. This volatility poses a distinct risk of adjustment, particularly to retail or 'mom-and-pop' investors who may be tempted by the original market buzz and undue oversubscription levels.