Amid continued global challenges and reiteration of resilience of Indian stock markets, September is going to mark the busiest month for initial public offerings (IPOs) in 14 years. So far, RBI informed over 28 companies entered the market.
This has been revealing in the primary equity market, particularly in the initial public offerings by small and medium enterprises, with massive oversubscriptions going all the way to mutual funds.
About 54% of the IPO shares sold to investors were liquidated within a week of listing, said a central bank's monthly bulletin. "A large number of listed companies are now resorting to qualified institutional placements or QIP for raising funds, in the range of some Rs 60,000 crore in the first eight months of 2024," it said.
With infrequent corrections on global cues, secondary market benchmark indices have moved up, and the outlook remains bullish, the RBI said. Global funds have been going on a spree investing heavily in the Indian debt market for the fifth consecutive month since May 2024. Corporate debt issuances remained low during the financial year so far despite easing yields due to the fact that issuers were awaiting the US rate cut.
Yet, even as giant risk capital investors continue to tread with caution, the landscape for early-stage investment is characterized by an explosion of micro venture capital firms and founder-led funds. Despite guardrails and fears about interconnectedness with the regulated financial system, the footprint of private credit – non-bank lending in high-yielding and illiquid debt-like instruments – is slowly growing for meeting the customized requirement of borrowers that are left underserved by the traditional sources of capital.
Private credit assets under management are estimated to be around $15 billion. "Fintech lenders, which are reported to have captured over 52 per cent of the market share of personal loans, are increasingly turning to private credit to raise funds and diversify borrowing sources. The resilience of private credit in a credit downturn, however remains untested," the Central Bank said.
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