India’s previously record-breaking initial public offering (IPO) market is now beginning to split into two sharply different stories. After two years of blockbuster fundraising, the mainboard IPO cycle has slowed considerably amid escalating war in West Asia, which is fuelling global uncertainty and risk aversion. Yet, despite these broader geopolitical headwinds, the small and medium enterprise (SME) segment has remained active, suggesting that investor appetite has not vanished but has instead become far more selective.
This caution is most visible in the mainboard market. May 2026 went without a single mainboard IPO, the first such month since March 2025, when US tariff announcements had rattled global markets. The pause comes just months after Indian companies raised an all-time high of ₹1.78 trillion through mainboard IPOs in FY26, surpassing the previous peak of ₹1.62 trillion in FY25, according to Prime Database data.
The slowdown has been sharp. Mainboard fundraising peaked in October 2025, when 10 IPOs raised ₹45,187.66 crore, before easing to ₹23,613 crore across nine issues in November and ₹21,858 crore across 10 IPOs in December. The momentum weakened further in 2026. Three IPOs raised ₹4,765 crore in January, seven issues mobilised ₹8,162 crore in February, and eight companies mopped up ₹5,852 crore in March. By April, fundraising had collapsed to just ₹1,076 crore through two IPOs, followed by a complete dry spell in May.
“The slowdown is directly traceable to the onset of West Asia geopolitical tensions that triggered a broad-based global market correction,” said Samir Bahl, chief executive officer, investment banking, Anand Rathi Advisors. He said the Nifty 50 dropped to 22,331 on the last trading day of FY26, with cumulative losses of 7% from the start of the Iran-US war. He added that 51 approved issuers had deferred listings due to timing rather than poor fundamentals.
While issuers are choosing to wait out the geopolitical storm, investors waiting on the sidelines have recalibrated their expectations.
Harshal Dasani, the business head at INVasset PMS, said the IPO market has moved from excess to selectivity. “After two record years, markets had priced perfection into many new issues. Once volatility, crude uncertainty and West Asia risks rose, weak demand disappeared first,” he said. The sharp fall in mainboard fundraising and the absence of IPOs in May show that the easy-money phase has peaked, he added.
SME defiance
But the SME IPO market tells a somewhat different story. Unlike the mainboard segment, SME IPO activity continued even as large issues slowed. In January, 19 SME IPOs raised ₹865 crore. In February, 14 SME issues raised ₹619 crore, while in March, nine issues raised ₹387 crore. April was softer, with four SME IPOs mobilizing ₹204 crore, but activity picked up again in May, when 17 SME companies raised ₹733 crore.
In FY26, SME IPOs raised a record ₹10,955.1 crore, compared with ₹9,119.9 crore in FY25.
Bahl highlighted that sustained activity in SME IPOs reflects investor appetite for high-growth companies with manageable issue sizes. Smaller offerings, often in the ₹10-100 crore range, can still find demand even when large-ticket issues struggle for timing and valuation comfort.
Dasani, however, cautioned that SME activity should not be confused with broad-based confidence. “SME IPO activity does show risk appetite, but it should not be confused with deep institutional confidence,” he said. The 17 SME IPOs that raised ₹733 crore in May, even when there was no mainboard IPO, reflected a narrower and more tactical pool of capital, he added.
Strong pipeline, but timing is key
Even as the primary market turned selective, the issue pipeline remains strong. As of May, IPOs worth more than ₹2.4 trillion had already received approval from the Securities and Exchange Board of India, while another ₹1.5 trillion are waiting for clearance.
But a strong pipeline does not guarantee immediate listing activity. Weak post-listing returns have already hurt retail and high-net-worth investor (HNI) sentiment. Bahl said around two-thirds of 2026 IPO listings are currently trading below their issue price, and average listing gains have fallen to about 8%, the lowest since 2019 and sharply below the 49% seen in 2024. This has hit the ‘listing pop’ trade that had historically driven retail and HNI demand. In recent issues, retail participation has remained weak, shifting the absorption burden to qualified institutional buyers. So even as the primary market launchpad is crowded, actual liftoffs will take some time.