Why do foreign investors sell Indian stocks but pursue IPO?

Hello, I Priyanka Salve, Senior CNBC correspondent by India, writing from Singapore. This week, I look at how global money is running out of the Indian secondary market, but are betting on Indian IPO.

This report provides a CNBC newsletter “Inside India”, which brings you timely, insightful news and comments to the market in the new power plant. How is what you see? You can subscribe Here.

A leading picture

A great story

Indian consumer technologies focused on Urban company The list on Wednesday offered a picture of global money coming to the country’s major shares.

The founders of the company, dressed in uniform blue jackets and pants, called the bell on the national exchange to start a trading day. And they were not the only smiles, as the day ended with their company’s stocks, which flew by almost 60% on their debut.

Last Tuesday, investors from San -Francisco, New York, London and Singapore, which were allocated by the city campaign for estimates 147.90 billion (almost $ 1.7 billion), said, IPO reports. In less than 10 days, the company’s estimate jumped up to $ 2.8 billion. The cost of distribution of the action was 103 rupees, and the last time the shares traded 64% above 169 rupees.

Enthusiasm around the city company emphasizes an interesting trend: since 2024 foreign investors have become pure sellers of Indian shares in the secondary market, but they seek to the main market of India, consisting of initial public proposals and subsequent public proposals.

Foreign investors made a net investment for a $ 14.5 billion tune in the primary market last year, while buying $ 14.4 billion from secondary markets, according to the National Securities Depository. Today, they were net sellers worth $ 20.7 billion, but invested a net 4.8 billion dollars in the primary market.

“We have found that there is a potential for creating the alpha by participating in IPO,” said Hiren Dasani, Chief Director for the New Market Firm at the Singapore firm White Oak Capital, which participated in the IPO city company.

For global investors, math is simple. The secondary Indian market looks overstated compared to other developing markets. The MSci Index Index trades at a cost of 25.4x value compared to the MSci Index, which develops on the India-with P/E 15,41x ratio. The MSCI China Index trades at 14.6x, and the MSci Korea index is 12.4x.

Even American, which imposed 50% of the tariffs for Indian exports, did not lead to significant correction on the market, preventing investors from entering cheap.

In such a scenario, the IPO offers a better game for Indian markets because management and bankers appreciate the issue of attractively, causing considerable interest in investors, CNBC experts said.

The return from the Indian IPO in 2024 was extremely higher by 37.1%, compared to the stock market’s profits just over 7%, the Global IPO Trends EY said.

“India usually represents an attractive opportunity for investors, thanks to the macro (eg GDP growth and a favorable demographic), a range of interesting business models and some extremely high-quality managerial groups,” said Alexander Trevs with JP Morgan Asset Management in response to CNBC, adding that IPO proposes to create a position in new actions in new actions Prices, “-in the provision of investors.

In terms of IPO value, India took second The largest and worldwide in the country is the second largest IPO. Hyundai Motor IndiaWhich has successfully raised $ 3.3 billion from investors.

The current market situation is a distant cry from Coal of India The release of $ 3 billion for a decade because of the internal media led to liquidity in the country’s banking system, including massive ransoms in mutual funds from investors seeking to invest in IPO.

Dasani said the ability of Indian markets to absorb large issues has improved, due to the growth of flow from domestic investors, adding that if foreign institutional investors can sell without any serious “cost of impact”, Fiis can also invest more. The cost of impact refers to The degree to which trading orders – buy or sell – can move stock prices.

Sustainable demand for domestic institutional investors deepened stock markets and improved liquidity, giving fiis confidence in the IPO without caring for trap.

Over the last 54 months, mutual stock funds have seen a pure influx, and assets managed by Indian mutual funds have increased to approximately $ 850 billion in June 2025 of approximately $ 696 billion in June 2024, according to the Association of Mutual Funds in India. Significant stock markets mean greater appetite for a greater IPO, causing interest from Fiis.

“In terms of IPO volume, the financial year of 2026 will be similar to the FY25, which was a record year in terms of public lists,” says Puroja Shavika, head of the director of investment banking in Nuvama. Given a number of large corporations that are in line for the list this year, he expects a “possessive value”.

October will probably witness the launch Tata Capital’s IPO for 2 billion dollars and release of the same size Indian subsidiary According to media reports of LG South Korea.

Last month Mukesh Ambani, Chairman of the Reliance company, and India, a conglomerate on telecoms, also Announced plans In the first half of 2026 in the first half of 2026 in the first half of 2026.

This interaction between domestic and foreign capital creates a virtuous cycle. Strong internal involvement gives companies confidence in the launch of large IPOs, and those in turn attract foreign investors who prefer scale and liquidity.

Folding it all together, foreign investors who sell in the secondary market, writing checks on IPO is not a contradiction, it is a strategy – the one that has still paid off.

Top Election TV on CNBC

Trade discussions between New Delhi and Washington appears to have taken a more positive turn when the US Brendan Lynch met Indian negotiators on Tuesday.

Anubkhuti Sahi, Head of the Indian Economics Department at a standard diplomatic bank, said it would be muffled on the trajectory of India’s inflation when New Delhi decides to move away from Russian oil imports.

Hazem Ben-Gacem, founder and CEO of BlueFive Capital, joined the CNBC access in the Middle East to discuss the $ 2.6 billion investment strategy for India and China.

Need to know

It is easier for foreign means to access the Indian market. The Securities Council and the exchange of India simplified its rules, which benefits about two -thirds of foreign investors, reports Reuters. These are also casual requirements for great initial public proposals.

Inflation in India grew in August. A Consumer price index came by 2.07%, Analysts’ expectations. In this regard, it increased from 1.55% in July with the increase in prices for vegetables, meat and fish, oil and fats, among other objects, the government said.

India faces heavy rain – but this is unlikely to push prices. Punjab’s key state staff faces Keep food inflation under controlAnalysts said.

– Yeo Boon Ping

India Nifty 50 The index traded 0.12% higher than at 13:20 local time, and the 30-time BSE Sensex increased by 0.15%. The indexes received 6.8% and 5.5% respectively this year.

The 10-year validity of the government’s government is traded by 6.51%at the age of 10.

Applicable

September 23: HSBC PMI Flash for September, Euro Pratik Wall Panels Sales Launches IPO

September 24: Stone VMS TMT manufacturer launches IPO

September 25: IT -Service firm IVALUE INFOSOLUTS Launches IPO

Each weekdays of CNBC news “Inside India” gives you news and comments to the market to new power plants and people behind its growth. Live the show on YouTube and Lave Highlics there.

Showtimes:

Us: Sunday-Thursday, 23: 00-0000 ET
Asia: Monday-Friday, 11: 00-12: 00 Sin/HK, 08: 30-09: 30 India
Europe: Monday-Friday, 0500-06: 00 CET