1 week ago
IPO and OFS Boom Diverts Funds From Secondary Markets
Companies and existing shareholders are offering many new shares to investors.
This has attracted money that might otherwise have been used to buy shares already listed on the market.
Primary-market inflows increased sharply from March through August.
At the same time, secondary-market inflows declined.
Some experts say this competition for money is limiting the rise of existing stocks.
Other experts say high oil prices, Middle East uncertainty and expensive valuations are more important reasons.
Fresh share sales can give companies money to expand, but offers for sale mainly pay existing shareholders.
Experts say prices could remain limited if new shares grow faster than company earnings.
Over time, they believe new issues could expand the market and support wealth creation.
Primary-market inflows rose nearly nine-fold from March to August.
Secondary-market inflows fell from Rs 1.42 lakh crore in March to Rs 34,369 crore by August 20.
Primary-market inflows accounted for 61.48% of total inflows in August, compared with 4.33% in March.
Experts differ on whether new issues or external concerns are the bigger drag on listed stocks.
Analysts expect the primary-market surge to broaden investment opportunities over the longer term.
- Who
- Domestic investors, companies raising capital, existing shareholders selling stakes, and market analysts.
- What
- A surge in IPOs, QIPs and OFSs is competing with purchases of already-listed shares for domestic investor funds.
- Where
- India’s primary and secondary equity markets.
- When
- From March through August 2026, with August data reported through August 20 or, in the article text, August 24.
- Why
- New equity supply is absorbing more domestic liquidity, while foreign investor selling and concerns about oil prices, the Middle East and valuations are also affecting the secondary market.
Primary-market competition is the key drag
Other market pressures matter more
Cause of weaker secondary-market activity
Primary-market competition is the key drag
Uttam Kumar Srimal and Vaqarjaved Khan said funds moving into fresh issues are competing with purchases of listed stocks and adding pressure to the secondary market.
Other market pressures matter more
V K Vijayakumar and Rishabh Nahar said primary-market activity may divert some money, but crude oil concerns, Middle East uncertainty, elevated valuations and stock-level rotation are more important factors.
Effect of offers for sale
Primary-market competition is the key drag
Vaqarjaved Khan said OFS proceeds go to existing shareholders and can move out of the market, weakening the immediate bid for listed equities.
Other market pressures matter more
Fresh issuance proceeds go to companies and can finance capital expenditure and growth, making that portion of primary-market fundraising potentially supportive of the broader economy.
Long-term market impact
Primary-market competition is the key drag
Srimal said rising share supply could cap valuations unless earnings growth exceeds the influx of new stock.
Other market pressures matter more
The analysts generally expect stronger primary-market activity to broaden the investible universe, finance expansion and support wealth creation as earnings materialise.
Key facts
- Primary-market inflows
- Rose from Rs 6,467 crore in March to Rs 54,852 crore by August 20.
- Secondary-market inflows
- Declined from Rs 1,42,960 crore in March to Rs 34,369 crore by August 20.
- August primary-market share
- Primary-market inflows represented 61.48% of total inflows through August 20.
- August secondary-market share
- Secondary-market inflows represented 38.52% of total inflows through August 20.
- Market performance
- The BSE Sensex and Nifty 50 rose 7.93% and 8.97%, respectively, in FY27 so far.
- Recent index gains
- The Sensex and Nifty 50 rose 1.54% and 1.96%, respectively, in July and August.
- Data discrepancy
- The table reports secondary-market inflows of Rs 34,369 crore through August 20, while the article text cites Rs 36,863 crore through August 24.
Quotes
Uttam Kumar Srimal
Deputy head of fundamental research at Axis Direct
“Secondary market valuations will likely remain range-bound until FII outflows stabilise or earnings growth accelerates past fresh market supply.”
financialexpress.com
Sources
Related news
IPO Rush Accelerates as August Issues Reach 11-Month High
India’s Public Market Fundraising May Hit Record ₹6.5 Trillion
NSE Listing to Headline India’s September IPO Rush
Tempsens Sets 2026 Record as IPO Boom Peaks in August
India IPO Market Maturing as Investors Seek Fair Valuations
Demat account additions hit 6-month high amid IPO frenzy
Engineers India stock rises 21% in a month
Promoters Sell ₹13,000 Crore Shares During August Rally
Axis Direct Recommends NTPC, Skipper, JSW Energy After Q1
Axis Direct bullish on VA Tech Wabag's record order book
