India's equity market is experiencing a contrasting trend: a surge in primary market activity alongside a struggle in the secondary market. Initial Public Offerings (IPOs) have been a significant driver, with mainboard IPOs raising approximately $1.77 trillion in FY26, contributing to a record $1.9 trillion across all IPO platforms. This robust IPO activity makes India second only to China in global IPO listings as of March 2026. The National Stock Exchange is also anticipating a substantial $55 billion payday, indicating strong interest in exchange operators.
However, this IPO boom is marked by increasing investor selectivity. While 109 mainboard IPOs occurred in FY26, up from 80 in FY25, average oversubscription rates dropped from 71 times to 39 times, and average listing-day gains fell from 29% to 7%. The Offer for Sale (OFS) component continues to dominate IPO proceeds, accounting for 61.2% ($1.45 lakh crore) of the $2.3 trillion raised in mainboard IPOs from January 2025 to August 2026. This indicates that a significant portion of capital raised is for existing investors and promoters to exit, rather than for companies to fund growth.
Mergers and Acquisitions (M&A) activity, while showing a 127% increase in value quarter-on-quarter in Q2 2026 to $27.9 billion, saw overall deal volumes decline. This value surge was primarily driven by a few large outbound transactions. In contrast, private equity (PE) activity moderated in Q2 2026, with 325 deals worth $8.4 billion, reflecting declines in both volume and value compared to Q1 2026, though average deal size increased. The M&A engine is slowing due to high interest rates, valuation gaps, and global uncertainties, pushing promoters and institutional investors towards the secondary market for exits.
Open market trades, such as bulk and block deals, have consequently surpassed $1 trillion in 2026, representing the second-highest value for the first four months since at least 2021. This trend is fueled by private equity firms seeking exit routes and sovereign wealth funds rebalancing portfolios. Despite strong domestic participation and over 225 million demat accounts, investor caution is evident in the secondary market's performance, with average annual listing performance for mainboard IPOs in FY26 being negative 17%, worse than the negative 13% in FY25.
