Amid rising uncertainty in the secondary market, the primary market also felt the heat in January. According to the Securities and Exchange Board of India’s monthly bulletin released on Tuesday, there were only 18 initial public offerings (IPOs) in January – the third lowest in FY26. Even the ₹5,500 crore that was raised from these issuances was the second-lowest fund raised during the fiscal.
“…it may be said that the moderation in primary market activity in January could be a phase of valuation normalisation following a strong issuance cycle, rather than indicating any structural weakening in primary market fundamentals,” the bulletin noted.
There were signs of moderation in valuations towards the end of December, along with intermittent volatility, following which the IPO activity declined the next month.
Downturn in domestic equity market
The domestic equity market saw a “notable downturn” in January, primarily due to renewed trade tensions on the global front and persistent selling by foreign portfolio investors (FPIs). Both benchmark equity indices Nifty 50 and BSE Sensex declined over 3% each during the month. The Nifty Midcap 50 index also fell more than 3% and the Nifty Smallcap 100 fell almost 5% during the same period.
On the global front, the number of India’s IPOs was the second highest after China’s 21 IPOs that raised $6.3 billion. While emerging markets across Asia showed a stronger IPO activity in terms of volume, developed markets saw fewer listings.
Companies linked to credit growth and domestic consumption are driving the primary market, with additional support from capital intensive sectors, as per the bulletin. The financial services sector led mainboard IPOs till January in FY26 accounting for 36% of the total funds mobilised, followed by consumer services (16%), consumer durables (10%), capital goods (9%), and automobiles (6%). “The emerging pattern underscores that capital markets are betting on India spending more, borrowing more and building more.”
FPIs in secondary market
FPIs continued to offload domestic equities in January too, extending the trend observed throughout 2025. They net sold shares worth almost ₹36,000 crore during the month. The sustained offloading can be attributed to a series of factors, including tepid corporate earnings, the depreciation of the rupee, and heightened global trade tensions around US tariffs.
While FPIs were net sellers in the stock market, they turned net buyers in the debt market in January, investing over ₹6,000 crore, primarily on the back of robust participation under the Fully Accessible Route (FAR) which attracted over ₹13,000 crore. However, this was offset by the net outflow of more than ₹7,000 crore in the debt-general category, as per the bulletin.