Market Activity
India's economy showed great signs of recovery in FY22 after the COVID-19 pandemic. India’s nominal gross domestic product (GDP) at current prices is estimated to be at Rs. 296.58 trillion (US$ 3.56 trillion) in 2023-24. Additionally, the Nominal GDP at current prices in Q2 of 2023-24 was Rs. 71.66 trillion (US$ 861.2 billion), as against Rs. 65.67 trillion (US$ 789.2 billion) in Q2 2022-23, estimating a growth of 9.1%. Real GDP at constant prices (2011-12) in the second quarter of 2023–24 is estimated at Rs. 41.74 trillion (US$ 501.6 billion), showing a growth of 7.6% as compared to the first quarter of 2022-23 estimated at Rs. 38.78 trillion (US$ 466.0 billion). These figures make India the fastest-growing major economy in the world, and this economic growth has translated to the investment market in India. Retail investors, mutual funds, and PE/VC firms have all stepped up their domestic investments in the Indian market.
The share of retail investors in equity holding listed on the National Stock Exchange (NSE) reached an all-time high of 27% year-on-year (YoY) in (April-August) 2023. In Q1 of 2023, retail holding went up in 908 companies listed on NSE. As on June 30th, 2023, the value of retail holdings was only Rs. 21.69 lakh crore (US$ 260.97 billion). As per a report by Zinnov, the share of Indian retail investors in listed equities has increased from 36% in FY17 to 41% in FY22, which was mostly fueled by the launch of new-age financial products like cryptocurrency, digital gold, non-fungible tokens, and small cases. According to BSE, the number of registered investors on BSE has jumped nearly 24% year-on-year.
India ranked 4th globally in tech venture capital (VC) investments recording US$ 24.1 billion in 2022. According to a report by Startup Genome, India has 429 scale-up companies with a total VC investment of US$ 127 billion and a cumulative tech value investment of US$ 446 billion. Moreover, India ranks 4th globally in terms of start-ups that have secured over US$ 50 million in disclosed venture capital (VC) investment.
On the FDI front, according to the Department for Promotion of Industry and Internal Trade (DPIIT), India's cumulative FDI inflow stood at US$ 953.14 billion between April 2000-September 2023; this was mainly due to the government's efforts to improve the ease of doing business and relax FDI norms. The total FDI inflow into India from April-September 2023 stood at US$ 33.12 billion, while the FDI equity inflow for the same period was US$ 20.48 billion.
From April 2000-June 2023, India's service sector attracted the highest FDI equity inflow of 16.29% amounting to US$ 106.70 billion, followed by the computer software and hardware industry at 14.86%, amounting to US$ 97.31 billion, trading at 6.18%, US$ 40.45 billion, telecommunications at 6%, US$ 39.31 billion and automobile industry at 5.41%, US$ 35.40 billion. India also had major FDI inflows during April 2000-June 2023, coming from Mauritius at US$ 166.82 billion with a total share of 25.47%, followed by Singapore at 23.42% (US$ 153.39 billion), the USA at 9.5%, (US$ 62.2 billion), Netherlands at 6.98%, (US$ 45.69 billion) and Japan at 6.24%, (US$ 40.83 billion).
India's Private Equity (PE)/Venture Capital (VC) investment environment is also scaling new heights, with increases in deal size, deal activity, and fundraising, as well as improvements in term sheets and benchmarking practices. Private Equity-Venture Capital (PE-VC) funds invested US$ 6 billion (across 139 deals) in India-based companies during the quarter ended September 2023. 1,261 deals were recorded of more than US$ 46 billion of Private Equity (PE) – Venture Capitalist (VC) investments in 2022.
Around 166 SME companies went public in 2023, raising a total of Rs. 4,472 crore (US$ 537 million) through IPOs.