FII game plan: Sell stocks for profit, bet on IPOs, discounted QIPs, block deals
Subscribe to enjoy similar stories. MUMBAI : Foreign institutional investors (FIIs) didn't entirely flee India in 2024, after all. They adopted a two-pronged approach: booking profit in the secondary market while placing bets in the equity capital market (ECM) by way of initial public offerings (IPOs), follow-on offerings (FPOs), and qualified institutional placements (QIPs).
Though FIIs were net sellers in the secondary market, they contributed to approximately 47% of anchor allocations in IPOs in the calendar year 2024, said Mahesh Natarajan, head-equity capital markets, Nomura. Natarajan added that even during October-November, when FIIs sold shares worth $13 billion in the secondary market, their share of the anchor book for the 14 IPOs executed in the period remained at approximately 47%, demonstrating their resilience in supporting India ECM deals. FIIs sold equities worth ₹6,823.19 crore amid weak global and domestic cues in 2024.
However, record local investor buying compensated for the sell-offs. Domestic institutional investors (DIIs) made net purchases worth ₹5,24,541.81 crore, showed data from National Securities Depository Ltd. Meanwhile, 91 main-board companies collectively raised ₹159,784.16 crore in 2024, over a threefold increase from 2023's ₹49,436 crore, showed data from Capital Market.
“Overall, India saw ECM activity worth $65 billion in 2024, with IPOs worth about $20 billion. That is keeping in mind, the average IPO listing return has been around 20+% while the large cap indices have returned approximately 9% in the year," said Natarajan. He explained that as the average size of IPOs increased (doubled between 2023 and 2024), FIIs looked at IPOs and FPOs as opportunities to pick up chunkier
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