In 2025, India’s once moribund IPO market underwent a stunning transformation. It was successful in raising large swaths of capital, but it came under increasing fire from analysts on Wall St. Once the most favored nation for investors, India has seen a rise in discontents. Now, in just a few months, it has plummeted to a much more unfavorable spot. For example, former U.S. President Donald Trump’s imposition of 50% tariffs on China shocked foreign investors and cast doubt on America’s investment climate. This decision is extremely important in today’s economic climate.
Over the first nine months of 2025, India’s IPO market had raised a whopping $11.5 billion. Analysts are currently estimating $10 to $11 billion more in that last quarter. If these projections are accurate, the year’s total may be well over $20 billion. This complicated dynamic has led to a remarkable 79 companies taking the plunge into this hot market so far this year. The vast majority of these newcomers are smaller companies looking to prove themselves.
In the face of this massive financial windfall, analysts are sounding alarm bells based on a series of factors that could shake investor confidence. Compounding this concern are high share valuations that have set off alarm bells. In stark contrast, India’s benchmark Nifty-50 index of its largest companies has eked out a lukewarm 6% return this year. Moreover, indices that track the performance of small and mid-sized firms have struggled with negative returns, adding to a tough overall market environment.
Foreign institutional investment in Indian equities has turned negative, with more than $20 billion divested just this year. Capital is rushing out the door as record numbers of young Indians take up stock market investing. They are using online applications to explore this trend even further. This demographic is driving what many are describing as a fundraising gold rush in Asia’s third-largest economy.
Out of the IPOs that have come out so far in 2025, only about half are trading above their opening dollars. This confluence of circumstances has raised the specter that investors are being failed to be given a reasonable basis upon which to make investments. Vivek Kaul notes the existence of “an entire industry working to first build and then maintain this mood,” suggesting that there may be pressures influencing investor sentiment.
“Investors currently see IPOs as a better place to make returns because of the chance of a 15-20% pop in the stock price on listing,” – Mr Jayasankar
The current IPO boom is accelerated by the potent combination of traditional institutional money and current systematic investment plans. These plans are growing quickly in popularity with individual retail investors, sometimes referred to as mom-and-pop investors. Mr Jayasankar adds, “Apart from institutional money, systematic investment plans by mom-and-pop investors in mutual funds have kept flows into IPOs robust.”
“There’s a lot of exuberance. Investors need to be selective and study the financials of the companies they choose. They must not invest blindly,” he warns.
The speed of India’s investment scene change is giving rise to concerns about its sustainability and long-term viability. As Mr Bathini observes, “India has gone from being the most favoured nation to the least favoured nation for them in a matter of months, because of tariffs and other uncertainties.” This one move could result in a lot more gunslinging behavior from would-be investors.
Abhinav Bharti expresses optimism about India’s IPO market future, stating, “This is just the start of the trend, and we should see India to be a regular $20 billion IPO market on an ongoing basis, if not higher.” These kinds of sentiments indicate a deep-rooted confidence that even in the face of today’s difficulties, there is still much promise and possibility in the industry.