Capital is actively shifting from the secondary market into a massive ₹5 trillion primary market pipeline, as investors reallocate liquidity toward initial public offerings (IPOs) and qualified institutional placements (QIPs) amid a subdued broader market, according to Madhu Lunawat, founder of The Wealth Company Mutual Fund.
Speaking to Mint, Lunawat noted that while retail investors are chasing small- and mid-cap stocks to beat a perceived personal inflation rate of 10-12%, foreign institutional investors (FIIs) remain cautious due to elevated valuations, currency depreciation, and heavy existing exposure to private banks.
On the lack of significant foreign institutional investor (FII) inflows into India, Lunawat said foreign investors are struggling to find high-quality Indian companies that offer reasonable valuations and sustainable growth, noting that companies growing at 60-70% are relatively rare in the Indian market.
The Indian market is highly polarized. Some high-quality stocks are available at attractive valuations, but investors are largely ignoring them. At the same time, certain expensive stocks continue to attract significant interest, even when their valuations are difficult to justify.
In India, companies growing at 60-70% are far less common. Those that do achieve such growth may be loss-making or trade at extremely high valuations.