Primary Markets Witness Best Ever Start for 2025, Amid Secondary Market Volatility

The year 2025 has begun with a record-breaking performance in India’s primary market, as it has witnessed the highest-ever fundraising in the first two months of the year. Despite turmoil and volatility in the secondary markets, the primary market has managed to establish a strong foothold, registering an all-time high for the start of a calendar year. A total of Rs 15,723 crore has been raised through nine mainboard IPOs, and Rs 1,804 crore has been raised through 40 SMEs that made their debut in the market.

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This surge in fundraising comes at a time when the secondary markets have been in a phase of corrections and fluctuations. The first two months of 2025 saw an unparalleled performance when compared to previous years. To put it in perspective, during the same period in 2024, 16 mainboard IPOs raised around Rs 10,763 crore, alongside 34 SME IPOs that raised Rs 1,140 crore. In stark contrast, the first two months of 2023 saw no mainboard IPOs, although 21 SMEs raised nearly Rs 340 crore.

Experts attribute this remarkable fundraising to strong participation from Foreign Institutional Investors (FIIs), who have remained net buyers in the primary market despite the ongoing volatility in the secondary markets. In fact, FIIs invested nearly $825 million in February and $449 million in January in IPOs. However, in the secondary markets, they have consistently been sellers, offloading nearly $4 billion in February and over $9 billion in January.

The robust IPO launches are seen as a sign of confidence among market participants, particularly the issuers, who believe that raising funds in the present market conditions will be prudent rather than risking their IPO approval lapsing. Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, highlighted that the IPO momentum in January and February was strong, driven by successful IPOs like Hexaware Technologies and Dr. Agarwal’s Health Care. This is despite continued selling pressure in the secondary markets, where FIIs have been pulling out funds. Bathini also mentioned that the retail investor participation in these IPOs has been relatively lower, which is a matter of concern.

As for the performance of specific IPOs, Hexaware Technologies has emerged as the leader in the mainboard IPO space, raising over Rs 8,750 crore. Dr. Agarwal’s Health Care Ltd and Ajax Engineering followed closely, raising Rs 3,027.26 crore and Rs 1,268.93 crore, respectively. Other notable IPOs include Quality Power Electrical Equipments, Laxmi Dental, Quadrant FutureTek, Indo Farm Equipment, and Standard Glass Lining Technology. Of these, six firms are currently trading below their issue price, while the remaining are trading only marginally above their respective issue prices.

The SME segment has also been active, with Capital Numbers Infotech raising the highest amount of Rs 169 crore, followed by Chandan Healthcare with Rs 107 crore. Other IPOs in the SME space include Solarium Green Energy, Tejas Cargo India, Rikhav Securities Ltd, and EMA Partners India. Despite this activity, the majority of the 40 SME IPOs are trading below their issue price, with only a few showing slight gains.

Looking ahead, experts are cautiously optimistic about the primary market. However, the ongoing global market uncertainties and the continued selling pressure in the secondary markets may affect the pace of upcoming IPO launches. While some IPOs are still proceeding despite broader market corrections, it remains uncertain whether this momentum can be sustained throughout the year. Market watchers also predict that IPOs will likely raise more capital on average, as companies look to prepare for rising geopolitical tensions and market corrections.

Conclusion

The primary market has shown resilience at the start of 2025, setting a new record for fundraising in the first two months of the year. Despite global market volatility, Foreign Institutional Investors continue to show interest in the primary market, while retail investor participation remains lower. The IPO landscape for 2025 looks promising, with several successful debuts, although the future may depend on the global market's stability and the ongoing concerns in the secondary markets. The outlook for the upcoming IPOs and market trends remains cautiously optimistic, but market participants must remain watchful of global uncertainties that could impact investment decisions.