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IPO Boom Worrying, Says CEA; Calls for Purpose-Driven Capital Markets
Chief Economic Advisor V. Anantha Nageshwaran stated that IPOs are becoming a means of exit for investors, weakening market sentiment. Speaking at a CII event, he said capital markets must evolve not only in scale but also in purpose.
On the IPO boom, Chief Economic Advisor (CEA) V. Anantha Nageshwaran has also voiced deep worry, saying that these were increasingly becoming an exit route for early investors in companies coming up with IPOs and denting market sentiment.
Addressing a gathering organized by Confederation of Indian Industry (CII), Nageshwaran said the capital markets must evolve not only in scale but also in purpose. In other words, celebrating false records-like companies' market capitalization or derivatives trading volumes-should be avoided. Such efforts risk diverting domestic savings from productive investment. The CEA further stated that, amidst all this, India has succeeded in developing a robust and advanced capital market. This has also contributed to short-term income management.
The CEA stated that while stock markets have grown rapidly, IPOs are failing to create a long-term capital raising ecosystem. From April to September, 50 companies raised ₹65,000 crore. Existing investors sold shares in most of the issues, while new issuances were very low.
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