Look at the downstream flow of gangetic investments

Copyright © HT Digital Streams Limit all rights reserved. The ‘gangotri’ (or origin) of capital flow in India over the past few years has been the humble but pure systematic investment plan (SIP). (IStockphoto) Summary A lingering part of India’s domestic SIP streams will eventually go into IPOs that do not add productive capacity. As with the river ganga, the origin of these streams is wonderful, but the current was disappointing. Anyone who has seen the ganga in the top of the Himalayas – especially the Bhagirathi section on the way from Gangotri to Devprayag – and then it is more extensive, but slower flow in the lower gangetic plains, perhaps struggling to believe that it is the same river. Which begins as a sparkling struggle of pristine water brown, because it winds its way to the sea. Something similar happens to domestic flow. The ‘gangotri’ (or origin) of capital flow in India in recent years has been the humble but purely systematic investment plan (SIP) – a simple yet powerful investment tools that buy savings mutual funds with predetermined intervals, such as each month or even a week, to retain the discipline of investment and benefit from the market. Investments through this route have grown a lot across the country. Also read: The IPO Gamble: It seems that the chance of investors of a modest £ 3,000 crore per month was piled up in 2016, when the Association of Mutual Funds in India (AMFI) began reporting this data, the figure rose to more than £ 28,000: an annual figure of almost $ 40 billion. Jefferies Research estimates that the Indian public stock markets received inflow of $ 100 billion in 2024 and is also on track a similar amount. In addition to SIP flow, investments made by the Employee Supply Fund Organization (EPFO) and the National Pension System (NPS) have also contributed to this total. This steady inflow has supported the resilience of the Indian stock market over the past year, despite heavily interrupted sale by foreign funds. At first glance, this consistent source of domestic capital seems to give a great advantage to an economy that needs capital, especially as foreign investment, both direct and portfolio, weak or in refuge. But the downstream use of this torrent paints a different story. India has become a large part of the initial public offers (IPOs), with 91 headboard offers raising a record of $ 19 billion in 2024. Despite sideways market movement, this trend continued in 2025. Also read: EPFO Reforms: Getting PF fees should not need special services. It would have been good for the Indian economy if the money thus raised would be used to build new factories or on research and development (R&D). After all, the original purpose of capital markets is to have savers and borrowers gather. As I noticed in an earlier piece in coin (‘The IPO Gamble: Why the chances seem to be the chance against Investors’, July 13, 2025), of the 275 IPOs since the pandemic, had 101 private owners selling interests and returning returns to their homelands. Of the $ 19 billion raised by IPOs in 2024, less than $ 8 billion was raised by primary offers (ie with money used for business purposes), while the remaining has given a retirement to existing investors. The latest rage among wealthy investors is to buy shares in unlisted businesses on the way to a bursary trading. Shares of the National Stock Exchange (NSE) are the poster child of this trend. According to recent reports, the unlisted NSE already has more than 150,000 shareholders, higher than just over 1000 in 2021. Also read: Is credit question really delayed? RBI’s liquidity puses tell another story, the bet is that the strong domestic flow will facilitate a high valuation bursary trading. This is, despite the fact that recent IPOs such as HDB Financial Services’ and NSDL were listed at considerable discounts on the prices on which their shares in the private market were traded. As we drive further downstream, we enter the area of private credit. Here, investors endorse a fund that borrows money via debt or debt-day instruments for purposes that a bank in general would not do. This includes lending to promoters of private entities, with their unlisted shares as collateral. Private credit funds also borrow for the purchase of land or to undertake mergers and acquisitions. Also read: The credit costs are not all: Cheap loans need productive uses for private credit to be lightly regulated and it is difficult to reach data, but it is estimated that it is worth $ 25 billion in India and grows rapidly. If you locate the expected road for a private loan to be repaid or for the collateral, it will lead to a heaped scholarship more frequently than not in the future. Again, the premise on which such a successful fluent relies is the domestic flow of funds. Just like Private Equity, who rejected new asset class institutions, followed individuals with high net worth with a spirit. It is a common practice for family offices to live with private credit funds, with promises of juicy coupons or high yields to adulthood to the ultimate crossword puzzle IPO. The Indian economy awaits an increase in private capital expenditure for a broad revival, which will hopefully result in household saving being channeled to productive purposes. Meanwhile, these savings find their way into the hands of smart investors who are in a way the public. The steady increase in household allocation to shares is a healthy trend, but too much of it goes from one of capital to another. It is the happiness of India that the mighty Ganga is a perennial river, but not all rivers. If domestic inflow would slow down significantly, the fragility of asset classes would become visible downstream. These are the personal views of the author. The author is the managing partner at Breakout Capital. Catch all the business news, market news, news reports and latest news updates on Live Mint. Download the Mint News app to get daily market updates. More Topics #epfo #nps #ipo Read Next Story