SynopsisFPIs have been net buyers of $3.9 billion (Rs 26,951 crore) worth of Indian equities in 2021 despite selling $6.8 billion (Rs 52,900 crore) worth of stocks in the secondary market.
ET Intelligence Group: Foreign portfolio investors (FPIs) showed a heightened interest in the primary equity market in 2021, notwithstanding their relentless selling on Indian bourses in the second half of the year.
They have poured in a record $10.8 billion (Rs 79,851 crore) in the country’s primary market so far in 2021, the data from NSDL show. It surpassed the previous high of $9.7 billion (Rs 71,718 crore) in 2020. Due to this, FPIs have been net buyers of $3.9 billion (Rs 26,951 crore) worth of Indian equities in 2021 despite selling $6.8 billion (Rs 52,900 crore) worth of stocks in the secondary market.
What makes the primary market attractive is the opportunity to acquire stocks at a discount to listed peers since the valuation offered in an IPO is usually at 10-35% lower than that of the listed peers to attract investors. The primary market also enables investors to gain exposure to companies where several earnings growth triggers may not be not be priced by the market. This leaves ample room for earnings-led surprise in the medium term. Further, the IPO route assures a sizable stake for large investors without any impact cost.
The country’s primary market reported a renewed action with 65 companies raising over Rs 1.3 lakh crore in 2021, 74.6% higher than the previous record in 2017. FPIs have been net buyers in the primary market for the past ten years, cumulatively pumping $44.8 billion (Rs 3.5 lakh crore). The primary market inflow accounted for nearly 75% and 40% of the total FPI flow in the past five and ten years, respectively.
Large public issues including One 97 Communications (Paytm), PB Fintech (Policy Bazaar) and FSN E-commerce Ventures (Nykaa) together attracted over $2 billion or 18% of the FPI inflow in IPOs.
(Originally published on Dec 27, 2021, 03:49 PM IST)
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