Zerodha's Nithin Kamath says India's primary market is 'red hot'

Zerodha founder Nithin Kamath says India’s primary market remains “red hot” even as the broader equity market struggles for momentum, with IPOs, Offer for Sale (OFS), and Follow-on Public Offers (FPOs) drawing strong investor interest.

In a LinkedIn post, Kamath said the amount raised through the primary market this year is already on track to match or exceed the levels seen in the previous two years. A strong pipeline of companies preparing to go public could further add to the momentum.

“While the broader markets have gone nowhere, the primary market (IPOs, OFS, and FPOs) is red hot. By capital raised, this year is already on track to match, if not surpass, the last two years. And there’s a big pipeline of IPOs coming up (link in comments)," said Kamath.

The IPO rush is also showing up on Zerodha’s platform. Kamath said the brokerage has seen a sharp increase in IPO applications, including users opening accounts specifically to participate in public offerings.

"Even at Zerodha, there’s been a big spike in IPO applications, including people opening accounts just to apply,” he added.

But strong demand does not necessarily translate into strong returns for investors. Kamath pointed to IPO listing data to highlight the difficulty of making money consistently from new listings.

Although 74–80% of IPOs opened above their issue price, “but a good chunk of them didn’t exactly deliver spectacular gains.”

In the latest period, 35% of IPOs opened just 0–10% above their issue price, while around 26% opened below the issue price, he added.

Kamath also pointed to another challenge for retail investors: getting an allotment in the first place.

“By the way, the one thing this chart doesn’t show is that the more popular the IPO, the lower your odds of actually getting an allotment.”

The primary market is expected to remain busy in the coming months, with companies such as Jio Platforms, PhonePe, Razorpay, and NSE among those expected to tap public markets.

Earlier this year, Shiprocket and Tata Capital also made their market debuts, adding to the IPO activity that has kept India’s primary market considerably more active than the broader equity market.