The Nifty 50 has been experiencing significant challenges, remaining below the 25,000 mark for the last six months since crossing it on 27 February. According to reports from Mint, the index has declined over 7% this year after hitting a record high of 26,373 on 5 January. Over the last two years, the index has lost 2% while declining 2.5% over the last year alone. The current downtrend is attributed to weak earnings, heightened geopolitical risks, foreign capital outflows, and currency weakness. The index has been stuck between 22,000 and 24,000 since its last crossing of the 25,000 mark, reflecting sustained pressure on market performance.
As reported by Mint, 59 mainboard and 113 SME IPOs have entered the primary market this year as of 25 August, cumulatively raising approximately ₹77,400 crore. Mainboard IPOs alone accounted for ₹72,000 crore of this total. According to Swastika Investmart, the renewed IPO boom is limiting liquidity available to secondary markets, with 238 companies queuing to raise roughly ₹4.72 lakh crore. However, INVAsset PMS Business Head Harshal Dasani noted that retail participation in IPOs has been subdued, with average retail subscription at 12.8 times across 28 mainboard issues, while QIBs account for roughly 61% of FY26 issue size. Some experts believe the IPO boom is one of the reasons keeping the market under pressure, though others argue it represents a reallocation effect rather than liquidity drain.
According to Equinomics Research founder G Chokkalingam, as reported by Mint, elevated oil prices and the IPO boom are major factors behind poor domestic equity market performance. He highlighted that the ₹31,000 crore LIC OFS and ₹11,693 crore SBI Funds Management issue absorbed institutional capital within weeks of each other. However, Steptrade Capital Director CA Kresha Gupta argued that IPOs represent a reallocation effect rather than liquidity drain, with investors preferring quicker returns from primary offerings during periods of market volatility and uncertainty. Gupta pointed out that volatility has increased over the last two years, and the Indian stock market has undergone a natural revaluation as a result of macroeconomic factors including war disruptions, tariff imposition, and FII outflows.
As reported by Mint, oil prices remain the biggest concern for markets, with the July oil import bill creating rupee pressure and fears of FII selling. Chokkalingam warned that if crude oil breaches $100 per barrel, it could disrupt recent FPI inflows. However, INVAsset PMS noted that retail liquidity remains intact through SIPs, which held above ₹31,000 crore for a fifth straight month. The analysis suggests that while IPO supply acts as additional market weight, it strengthens the market cycle over the long term by deepening free float and bringing quality paper to the market. Some experts believe the market is experiencing curtailed retail liquidity due to the flood of IPOs, though others argue this is a timing and allocation shift rather than a genuine liquidity shortage.
