For a market that raised Rs 1.59 lakh crore in 2024 and carried that momentum into 2025 with nearly 1.8 lakh crore fundraising, this sudden slowdown has raised questions about the sustainability of the boom.
According to Prime Database, 84 companies have already received Sebi approval and plan to raise around Rs 1.14 lakh crore. Another 108 companies are awaiting regulatory clearance, collectively seeking Rs 1.46 lakh crore. That means more than 190 companies are in the queue.
So why is the launch activity muted?
The answer lies in the secondary market. The Nifty is down 1.4% so far this year. Broader markets, especially mid- and small-cap indices, have corrected more sharply. When markets turn volatile, investors shift their focus. Instead of putting fresh money into new IPOs, many prefer to average down on existing holdings.
Khushi Mistry, Research Analyst at Bonanza, says the slowdown is largely sentiment-driven. “Market corrections in broader and mid-cap indices have eroded investor risk appetite. Investors are prioritising averaging down existing holdings over new subscriptions. Muted activity may persist until secondary markets stabilise,” she says.
Also read: Risk-on trade back? Smallcap stocks rally up to 28% in 2026, but market breadth stays weakForeign investor behaviour has also added pressure. Early January saw foreign institutional investors pulling out more than Rs 7,600 crore amid global concerns and rupee weakness. When FIIs turn cautious, liquidity tightens and risk appetite reduces, especially for fresh listings.
Vinit Bolinjkar, Head of Research at Ventura, points out three key factors behind the slowdown — corrections in mid- and smallcaps, FII outflows and post-Budget volatility. “Companies are delaying launches for better valuations. Reduced exposure to Indian equities by FIIs is further depressing sentiment,” he says.
The recent Union Budget also triggered volatility, particularly with higher Securities Transaction Tax on derivatives. The Sensex fell sharply post-announcement, adding to caution in both primary and secondary markets.
Another important factor is listing performance. Recent IPOs have not delivered strong post-listing returns. When retail investors see muted gains or losses in fresh listings, confidence weakens. That, in turn, affects subscription levels of upcoming issues.
Uday Patil, Executive Director at PL Capital Markets, says companies are waiting for better conditions. “Secondary market volatility and valuation concerns have weakened investor appetite. Companies hesitate to launch new IPOs anticipating poor reception. The lull is not structural, it is time-based,” he said.
Ravi Singh, Chief Research Officer at Master Capital Services, adds that IPO cycles are naturally linked to market highs. “Historically, large IPOs coincide with periods of buoyant market activity. High valuations and strong demand are advantageous for capital raising and exits. Once sentiment improves and a few quality issues deliver decent listing gains, confidence will return,” he said.
Is the pipeline under threat?
The pipeline itself remains strong. Over Rs 2.5 lakh crore worth of IPOs are waiting. That is a huge backlog. The key question is timing. Analysts expect the slowdown to continue through February and possibly March as markets digest recent corrections and investors wait for earnings clarity. However, many believe activity could pick up in the second quarter of 2026 if conditions improve.
There are also potential triggers. If foreign flows stabilise, corporate earnings show resilience and volatility reduces, companies may quickly hit the market. Large marquee names in sectors such as fintech, consumer tech and infrastructure are reportedly in the pipeline. Big listings often act as confidence boosters for the broader IPO market.
Vinit Bolinjkar believes Q2 2026 could see revival. “If secondary markets recover and FII flows reverse, the large Sebi-approved pipeline can proceed. Marquee names could accelerate the pickup,” he says. Uday Patil echoes a similar view. “The IPO activity could strengthen in the medium to long term. The backlog means launches can happen quickly once sentiment improves,” he said.
The IPO market tends to move in cycles. When markets are strong, companies rush to list. When volatility rises, activity slows. But that does not mean the opportunity disappears. It simply waits for the right window. For investors, the current phase may actually be healthy. It enforces valuation discipline. Companies cannot command aggressive pricing in a weak market. That could mean better pricing and more realistic valuations when launches resume.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)