India beats China in record IPOs, hits $4 trillion jackpot

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third quarter of 2023 saw a staggering 21 IPOs in the Indian main market, compared to just four in the same quarter of 2022

Bombay Stock Exchange on Diwali evening

Bombay Stock Exchange on Diwali evening

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By S Jha

New Delhi, December 5: India has raced past China in the number of listing of initial public offers on the stock exchanges. Reports by global consultancy firms state that India has emerged as the world leader in IPOs this year, leaving China far behind.

The buzzing Indian equity market has also for the first time is commanding a $4 trillion valuation. This is a first of the Indian equity markets with the last hurrah coming from the gains on bourses on the back of victory of the BJP in Madhya Pradesh, Chhattisgarh, and Rajasthan. The brokerages have come out with reports claiming that the “cloud over the 2024 Lok Sabha elections has now been cleared”.

China has seen a sharp decline in the IPOs even after reopening the economy. The global consultancy firms have stated that the sharp decline in the IPOs in China is possibly linked to the crackdown against the tech companies by the Communist regime in Beijing. It may be recalled that the fancied Jack Ma of the Alibaba fame had lately gone in hiding and he was briefly seen in Japan before he reappeared again. His criticism of the financial regulatory system in China two years ago had set off a reprisal from the Xi Jinping led Communist regime after which the valuation of the tech firm had nosedived.

Earnst and Young in a report said that the “third quarter of 2023 saw a staggering 21 IPOs in the Indian main market, compared to just four in the same quarter of 2022”. It further stated that “companies with strong and well-governed business models are being rewarded by the market, as over 25 firms plan to raise funds in the upcoming quarters, with this IPO momentum expected to continue into the second half of 2024”.

In fact, the first week of December saw six IPOs hitting the primary market with the likes of Tata Technologies, IREDA, Gandhar Oil, and Flair Writing clocking 167 per cent, 87 per cent, 78 per cent and 48 per cent gains on listing. At the same time the Small and Medium Enterprises (SME) is buzzing with a steady flow of IPOs with investors netting massive gains by investing in them. While the people can subscribe to IPOs on NSE and BSE with as little as Rs 15,000, one needs to block about Rs two lakh to subscribe for SME IPOs.

But the story in China is a sharp contrast. Financial Times in a report said: “A record number of companies have dropped plans to list on Shanghai’s tech-focused stock market…Public records show 126 companies have cancelled or suspended IPO applications on Shanghai’s Star Market in 2023, more than in the previous four years combined.”

The 30-share index SENSEX has posted a gain of almost 10 per cent in the last one year. The 50-share index NIFTY has posted a gain of almost 11 per cent in the last one year. The indices have added over Rs four lakh crore in valuation a day after the Assembly poll verdict.

The EY in its report stated that “the proceeds raised during Q3 2023 amounted to $1,770 million, a significant increase of 376 per cent compared to $372 million in Q3 2022. This represents a remarkable 425 per cent increase in the number of deals. The Small and Medium Enterprises (SME) segment also recorded significant success by raising $165.76 million via 48 IPOs in Q3 2023”.

With reports claiming that the US-based fund houses are betting on emerging markets minus China for their investment destinations, market participants claim that Indian equity market could further gain attention of the investors in the next few months.

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