The deserted Bombay Stock Exchange building is pictured as the Sensex went down after a lockdown in the wake of the start of the novel coronavirus pandemic, in Mumbai on March 23, 2020. Photo: The Times Of India

As the Indian stock markets remain buoyant, five firms, including digital payments major Paytm’s parent One97 Communications, have planned initial public offerings in the first half of November.

The other four are PB fintech, the parent company of online insurance platform Policybazaar; Sapphire Foods India, which operates KFC and Pizza Hut outlets; decorative aesthetics supplier SJS Enterprises; and microcrystalline cellulose manufacturer Sigachi Industries. These five firms are expected to collectively raise 270 billion rupees (US$3.6 billion), Press Trust of India reports.

Meanwhile, the three-day initial share sales of online beauty products seller Nykaa and fintech firm Fino Payments Bank conclude on November 1 and November 2, respectively. Nykaa is looking to raise 53.52 billion rupees, while Fino Payments Bank is seeking to 12 billion rupees. These seven entities will raise nearly 335 billion rupees through initial share sales.

Market analysts believe the ongoing bull market will help these companies get better valuations and that investors will favor tech companies. They expect the current trend of startups going public to continue in the near term.

So far in 2021, as many as 41 companies have floated their initial share-sales to raise 669 billion rupees and by the end of this year, it may touch 1 trillion rupees. Edible oil manufacturer Adani Wilmar and health insurance firm Star Health & Allied Insurance have also received the capital market regulator’s approval for initial share sales.

Fundraising so far this year is much higher than the 266 billion rupees collected by 15 companies through initial share-sales in all of 2020. Such impressive fundraising through initial share sales was last seen in 2017 when 36 firms entered the capital markets and mobilized 671.47 billion rupees.

One97 Communications was initially set to sell shares worth 160 billion during the initial public offering but later raised it to 183 billion rupees. The existing shareholder raised the offer-for-sale component to 100 billion rupees from 83 billion planned earlier. The initial share sale will commence on November 8 and be fixed with a price band of 2,080-2,150 rupees apiece. This implies that Paytm’s valuation stands at 1.44-1.88 trillion rupees.

Selling pressure

On the down side, foreign portfolio investors’ appetite for the Indian capital markets is showing signs of tapering off. After two months of buying, they turned net sellers in October by pulling out 122.78 billion rupees in Indian markets.

The foreign portfolio investors were net sellers in software during the first half of October as they wanted to book profits. However, they continue to buy bank and auto stocks as the valuations are much more favorable.

According to depository data, foreign portfolio investors took out 135.5 billion rupees from equities in October but invested 12.72 billion rupees in the debt segment.