India: A Capital Markets: Equity Overview

Over the years, Indian capital markets have undergone significant transformation, resulting in a more mature, efficient and resilient market. To support the investment appetite and meet corporate India’s long-term funding needs, this transformation has been supported by a robust disclosure framework aimed at providing investors with adequate information for their decision-making and providing ease of doing business for the issuers. The regulation of capital markets and securities transactions in India is overseen by the Securitites and Exchange Board of India (SEBI), which is an independent statutory body established under the Securities and Exchange Board of India Act, 1992. The SEBI has played a crucial role in facilitating the development of the Indian capital markets by monitoring the activities of the stock exchanges, curbing fraudulent practices, providing improved access to issuers to public funds, safeguarding the rights of the investors, adopting technology enabled processes, defining code of conduct for intermediaries and overall promoting market integrity and transparency.

Today, India's capital markets may be regarded as a more mature and sophisticated market with the vigilant functioning of SEBI. Poised to support India’s growth story, Indian capital markets have undergone crucial primary market related reforms in recent times, especially for issuers contemplating an initial public offer.

These reforms have been in the backdrop of what has been a stellar run for the Indian capital markets, especially the equity markets with increasing amounts being mobilised each year for three years running. In 2025, 103 Indian corporates raised an all-time high of INR1,759,010 million through main board IPOs, 10% more than the previous high of INR1,597,840 million mobilised by 91 IPOs in 2024. When small and medium enterprise IPOs are considered, the numbers were INR1,873,310 million in 2025 and INR1,685,450 million in 2024. (Source: primedatabase.com)

In terms of global numbers, Indian stock exchanges (NSE & BSE) occupied the top spot in terms funds raised, vis-à-vis global stock exchanges, in 2024. Even with the backdrop of global uncertainties, the first quarter of 2025 alone saw 62 IPOs in India raising a total of USD2.8 billion. (Source: EY Global IPO Trends Q1 2025). India remains a leading destination for companies seeking to go public, even amidst a backdrop of global market uncertainties. A report published by Boston Consulting Group (BCG) in 2025 named India as the world’s best-performing capital market over the past decade, returning average annual total shareholder returns of 15.2% to shareholders per year, which is the highest among the major economies. (Source: BCG, https://www.bcg.com/publications/2025/indias-path-to-continued-outperformance)

The fundamental objective of the SEBI is to protect the interest of the investors and in doing so it has actively enforced various rules and regulations to govern different aspects of the capital markets such as monitoring the role of intermediaries, investigating malpractices, implementing frameworks for different kinds of fund raising and undertaking other measures for matters connected therewith. The ICDR Regulations was enacted to prescribe eligibility conditions, pricing guidelines, disclosure norms and compliance requirements for public offerings. It also aims at ensuring transparency, investor protection and fair practices in the process of raising capital from the investors. Further, the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, was enacted to consolidate the principles for disclosures and compliances by listed entities, including corporate governance requirements. The Securities Contracts (Regulations) Act, 1956 aims to regulate the business of dealing in securities and prevent undesirable transactions in securities, while the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 was enacted to curb market manipulation and cater to changing dynamics of the market by prescribing the code of conduct for prohibition of insider trading, procedures for disclosure and penalties for violation therein. In addition to the regulations governing the primary market, the SEBI also oversees the participation of foreign investors in the Indian capital markets, who are required to meet the investment norms of the SEBI set out in the respective regulations that govern them as well as the investment norms prescribed by the GoI and the RBI with respect to foreign investment in India.

Some of SEBI’s recent reforms, have also helped boost the capital markets – through easing of processes or increasing investor confidence. Measures include:

• Reduction in the timeline from the date of offer closure to the date of listing of shares through public offers from six working days to three working days;
• Allowing issuers to pre-file their offer documents with the SEBI before disclosing the same to the public, allowingyou companies to test the waters without divulging much to their competitors;
• Additional condition to offer for sale for certain categories of companies wherein selling shareholders, holding more than 20% of the pre-offer shareholding of the issuer, must not offer more than 50% of their pre-offer shareholding in the issuer. Further, in case the selling shareholder is holding less than 20% of the pre-offer shareholding of the issuer, it must not offer more than 10% of the pre-offer shareholding of the issuer;
• Monitoring the utilisation of offer proceeds, including the general corporate purposes, by permitted credit rating agencies. These credit rating agencies, together with the audit committee of the issuer, will be required to monitor the fund utilisation in accordance with applicable laws;
• Reduction of lock-in period applicable to pre-offer shareholders. However, in case majority of the offer proceeds is proposed to be utilised for capital expenditure, the promoters’ pre-offer shareholding will continue to be locked-in for the original period;
• Allocation to Non-Institutional Investors (NII) has been modified wherein one-third portion of the allocation will be reserved for NIIs with application size of more than INR2,00,000 million but less than INR10,00,000 million while the remaining portion will be reserved for NIIs applying for more than INR10,00,000 million in an initial public offer;
• Disclosure of key performance indicators disclosed to pre-IPO investors through the IPO offer documents and continued disclosure of these metrics till utilisation of issue proceeds;
• Introduction of distinction between underwriting for under-subscription and bid rejection and different timing for underwriting for these categories;
• Minimum price band of at least 105% of the floor price for all book building issues; and
• Introduction of framework for social stock exchange to facilitate fund raising by social enterprises and prescribing related disclosure requirements.

The SEBI is continuously refining the laws and regulations to keep pace with the evolving business ecosystems. In case of the primary market, the core focus is to stimulate investors’ interest in capital issues by strengthening norms for and raising standards of disclosure in public issues. Measures for the secondary market are aimed at making the market more transparent, modern and efficient.

The Indian financial system has sustained a robust capital market to channel resources for productive investment and support funding requirements of companies. Overall, the SEBI's efforts in streamlining the capital markets have helped to enhance investor confidence, democratise issuer’s access to markets, enhance financial literacy, promote transparency and ensure stricter compliances for diligence.