Author: Aadarsh Patel | EQMint
India’s primary market is witnessing a remarkable IPO boom even as the broader stock market struggles to deliver strong returns.
Between January and August 2026, 62 mainboard IPOs raised ₹73,673.54 crore, while 126 SME IPOs raised another ₹5,738.88 crore, according to PRIME Database data cited by Outlook Business. If ongoing issues are fully subscribed, total IPO fundraising in 2026 could cross the ₹1 lakh crore mark.
The contrast is striking: investors continue to put money into new public issues even while returns from existing listed stocks remain relatively muted.
Stock Market Returns Remain Limited
The Nifty 50 has returned just 6.04% over the past three years, according to NSE data cited in the report.
The Nifty Midcap 150 performed better, gaining 14.60%, while the Nifty Smallcap 250 returned 14.42%.
The picture becomes weaker when looking at the most recent year. The Nifty 50 was down 6.43% over one year, although its year-to-date return stood at 10.51%.
At the individual-stock level, 27 Nifty 50 companies were in negative territory over the past year.
This raises an important question: Why are investors still aggressively subscribing to IPOs when the secondary market is struggling?
Domestic Liquidity Is Powering the IPO Market
One of the biggest reasons is the growing pool of domestic savings.
Analysts cited by Outlook Business point to strong SIP and mutual-fund inflows, rising retail participation, and continued buying by domestic institutional investors as key drivers of IPO demand.
Unlike the secondary market, where foreign institutional investors have been selling, IPOs give investors an opportunity to enter new companies with fresh growth stories and specific pricing opportunities.
This means investors do not necessarily need to be bullish on the entire market to be interested in a particular IPO.
IPOs Are Competing With Existing Stocks for Money
However, the growing primary-market pipeline is also creating a liquidity challenge.
When several IPOs open close together, investors have to allocate money towards applications and subscriptions. That capital may temporarily remain unavailable for purchases in the secondary market.
According to the report, domestic secondary-market inflows fell from around ₹1.42 lakh crore in March to approximately ₹35,000–40,000 crore in July-August, while primary-market absorption increased.
Analysts therefore believe the IPO boom has become a near-term headwind for some existing listed stocks.
OFS Deals Make the Liquidity Question More Important
The structure of an IPO also matters.
In a fresh issue, money raised goes to the company and can be used for expansion, debt repayment, or other corporate purposes.
In an Offer for Sale (OFS), existing shareholders sell their shares and receive the proceeds.
Outlook Business notes that OFS transactions accounted for 61% of mainboard IPO proceeds in FY26, while fresh issues contributed 39%.
This distinction is particularly important for large upcoming IPOs.
The expected NSE IPO, for example, is largely an OFS transaction, while the planned Jio Platforms IPO is expected to include a significant fresh-issue component.
Foreign Investors Are Selling Stocks But Buying IPOs
Foreign portfolio investor activity highlights the divergence even further.
According to NSDL data cited in the report, FPIs sold ₹13,918.41 crore worth of Indian equities in the secondary market during September so far, while investing ₹1,306.03 crore in the primary market.
As of 2026, FPI selling in the secondary market has reached around ₹2.84 lakh crore, while primary-market investment has totalled approximately ₹47,153.50 crore.
The pattern suggests that foreign investors are not necessarily abandoning India altogether. Instead, they appear to be becoming more selective about where they deploy capital.
IPO Returns Are Also Becoming More Selective
The IPO boom does not mean every new issue is delivering strong returns.
According to Grant Thornton Bharat data cited by Outlook Business, the average IPO oversubscription ratio declined to 39 times in FY26 from 71 times in FY25.
Average listing-day gains also moderated sharply, falling to 7% from 29%.
The average annual performance of listed IPOs stood at a negative 17%, highlighting the growing importance of valuations and company fundamentals.
This suggests that investors are still interested in IPOs but are becoming more careful about which companies they choose.
India’s IPO Pipeline Remains Strong
Despite the concerns, the primary market shows no signs of slowing down.
PRIME Database estimates that 159 companies have received SEBI approval but have not yet announced their IPO opening dates.
The pipeline includes major names such as Jio Platforms, which could potentially become one of India’s largest public offerings.
The current cycle also follows two exceptionally strong years for India’s IPO market.
In 2025, companies raised around ₹1.95 lakh crore through more than 365 IPOs, according to Motilal Oswal Financial Services. In 2024, around ₹1.90 lakh crore was raised through 336 IPOs.
IPO Boom vs Stock Market: Key Numbers
| Indicator | Data |
|---|---|
| Mainboard IPOs Jan-Aug 2026 | 62 |
| Mainboard funds raised | ₹73,673.54 crore |
| SME IPOs Jan-Aug 2026 | 126 |
| SME funds raised | ₹5,738.88 crore |
| Nifty 50 3-year return | 6.04% |
| Nifty Midcap 150 3-year return | 14.60% |
| Nifty Smallcap 250 3-year return | 14.42% |
| Nifty 50 one-year return | -6.43% |
| FY26 IPO oversubscription | 39x |
| FY26 average listing gain | 7% |
What This Means for Investors
India’s IPO boom is not necessarily proof that investors are overwhelmingly bullish on the stock market.
Instead, it reflects the growing depth of India’s domestic savings pool and a shift towards new companies, fresh opportunities, and selective investments.
For companies, the current environment provides an attractive opportunity to raise capital or allow existing shareholders to exit.
For investors, however, the increasing supply of IPOs means capital is being spread across a much larger number of opportunities.
The key question is whether IPO demand can remain strong without continuing to divert liquidity away from existing listed companies.
EQMint Take
India’s IPO market is clearly booming, but the broader stock market is telling a more cautious story.
The combination of strong domestic savings, SIP inflows, and retail participation has created enough liquidity to absorb a massive pipeline of new listings. At the same time, FII selling, high valuations, and muted secondary-market returns are keeping investors selective.
The IPO boom is therefore best viewed as a sign of deepening capital markets rather than a guarantee of broad-based market strength.
As more large IPOs such as NSE and Jio enter the market, investors may have to make increasingly careful choices between putting money into new listings and buying companies that are already trading on the exchanges.
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