Nomura Holdings expects India’s capital markets to be resilient in the event of foreign investors suddenly getting cold feet. In such an event, local financial institutions and retail investors flocking to invest will continue to lend their support, notes the Japanese financial services company. 

“Even if there is a shock in one pillar, like a downturn in the flow of foreign money, it will be complemented by the domestic institutions and retail investors,” Mangesh Ghogre, the executive director and head of equity capital markets of Nomura India told the Bloomberg Television in an interview on Friday. 

“In the past two years, especially after the pandemic with the digital adaptation, we have seen significant jump in the retail investors to 45 per cent from 30 per cent,” Mr Ghogre said. 

Indian markets had historically relied on two sources of capital: local institutions and foreign money, Mr Ghogre added.

Some investors are worried that rising global interest rates or withdrawal of central bank stimulus could choke off the flow of overseas funds into the country’s public and private markets, posing a threat to the boom in initial public offers (IPOs) from companies. 

Indian companies have raised $10.8 billion from first-time share sales this year, according to data compiled by the Bloomberg. At this pace, 2021 could well surpass the record $11.8 billion mopped up in 2017. 

“There are questions raised, but 2022 will be a continuation of what we see in 2021,” Mr Ghogre said. Looking at the pipeline of companies seeking IPOs and the listing track records of those that have debuted, the party should continue, he added. 

One source of confidence for the market is that loss-making companies are able to tap the market in India, whereas they once would have looked to list in developed markets, such as the US. “That shift is well established that they can look at India as a primary listing destination,” Mr Ghogre said. 

Apart from digital companies looking to raise money, Mr Ghogre also expects some green energy companies to tap the market as investors seek to invest in the Environmental, Social and Governance (ESG) theme.