India's capital markets have demonstrated remarkable resilience and growth, outperforming emerging market peers in FY24 despite facing geopolitical tensions, rising interest rates and volatile commodity prices.
The Economic Survey for 2023-24 highlights this phenomenon, noting that the country's economic stability and favourable investment climate have significantly contributed to a robust primary market. Capital formation reached an impressive Rs 10.9 lakh crore, accounting for approximately 29 per cent of the gross fixed capital formation of both private and public corporates in FY23.
The surge in initial public offerings (IPOs) is a testament to this growth, with the number of IPOs increasing by 66 per cent to 272 in FY24. The total amount raised through these offerings grew by 24 per cent, reaching Rs 67,995 crore. Small and medium-sized enterprises (SMEs) also played a crucial role, as their IPOs and follow-on public offerings (FPOs) rose by 1.6 times, with funds raised more than doubling to Rs 6,095 crore.
According to the E&Y Global IPO trends report, Indian exchanges have emerged as leaders in global IPO listings, with India's share rising from 6 per cent in 2021 to 17 per cent in 2023. Qualified Institutional Placements (QIPs) have become a preferred method for equity fundraising, while mobilisation through rights issues more than doubled to Rs 15,110 crore in FY24.
This impressive growth underscores the increasing significance of capital markets within India's investment landscape, driven largely by advancements in technology, innovation, and digitisation. As the nation continues to navigate global uncertainties, its capital markets are positioned to remain a bright spot, reflecting the underlying strength and potential of the Indian economy.
The Bombay Stock Exchange (BSE) benchmark Sensex has also seen substantial gains, surging around 25 per cent in FY24, with further momentum carrying into FY25. The index reached the 80,000 mark in intra-day trading for the first time on 3 July, underscoring investor confidence. The Economic Survey attributes the exemplary performance of Indian capital markets to their ability to withstand global geopolitical and economic shocks, supported by a solid domestic macroeconomic outlook and a strong domestic investor base. As India progresses, the capital markets are expected to play an increasingly prominent role in driving economic growth and attracting investment, reinforcing the country's status as a key player in the global financial landscape.
