Foreign funds turn picky on Indian IPOs as anchor share hits five-year low

what happened

According to PRIME Database data cited by Moody's, foreign portfolio investors (FPIs) accounted for 36.16% of IPO anchor books so far this year, down from a 62.75% peak in 2021. That is the lowest level in five years; the previous low was 37.85% in 2022. FPIs' share of total IPO fundraising also fell to 11.61%.

Domestic institutions such as mutual funds, insurers and pension funds are filling the gap. Foreign investors have not left primary markets entirely: NSDL data shows they made net investments of Rs 13,239.35 crore in the 'primary markets and others' equity category in October, up 23% year on year. Meanwhile the Nifty 50 is down about 12% this year, and foreign investors have sold a net Rs 2.95 trillion of Indian equities.

Large offerings still draw global money. The Jio Platforms anchor book drew bids above $25 billion, more than 30 times the shares on offer.

why it matters

A weaker foreign presence in IPOs means India's primary market increasingly depends on domestic capital, which may price deals more cautiously. Large transactions like Jio Platforms remain the main way to bring global demand back.

market impact

Indian equities: fewer foreign IPO buyers and ongoing outflows weigh on the Nifty 50

• ▼Nifty 50 pressure down — continued foreign outflows and selective demand for new listings

instruments