India Eyes 10% Capex Hike Amid Record Market Milestones and IPO Boom

The Indian government plans to boost capital expenditure by 8-10% in fiscal year 2025 due to high tax revenue and a record transfer from the RBI. This comes as the BSE's market cap surpasses USD 5 trillion and 55 companies plan to raise Rs 68,000 crore through IPOs.

In light of higher-than-anticipated tax revenues and a record surplus transfer from the Reserve Bank of India (RBI), the Indian government is considering an 8-10 percent increase in capital expenditure for fiscal year 2025, as revealed in Pantomath Group's quarterly report, 'Market Kaleidoscope: Quarterly Market Insights.' This adjustment aims to raise capex from the previously allocated Rs 11.11 lakh crore, bolstering infrastructure and economic growth.

This fiscal enhancement coincides with India achieving an unprecedented financial milestone, as the total market capitalization of all stocks listed on the Bombay Stock Exchange (BSE) briefly exceeded USD 5 trillion. This places India in the league of global giants like the US, China, Japan, and Hong Kong. With 55 companies planning to raise over Rs 68,000 crore through Initial Public Offerings (IPOs), the primary market is set for a dynamic phase.

In the first half of 2025, 35 mainboard IPOs raised approximately Rs 32,000 crore with an average subscription rate of 61 times. The Indian market maintained a positive outlook in the first quarter of FY2025, fueled by strong Q4FY24 earnings, favorable economic data, and positive global cues.

Despite volatility following the 2024 Lok Sabha election results, market sentiment improved with the BJP securing 272 seats and the NDA, with allied support, achieving 292 seats. Political stability under Prime Minister Narendra Modi's leadership is expected to promote long-term economic growth, focusing on infrastructure, electric mobility, startup support, power distribution, digital privacy, and healthcare initiatives.

Corporate India's performance in the March quarter of FY2024 met expectations, showing double-digit growth in net profit and single-digit revenue increases. Non-lending companies saw moderate operating margin expansion due to favorable commodity prices and cost controls.

Peaking interest rates and consistent government policies are anticipated to support healthy corporate growth in FY2025. The government's push for increased ethanol production targets a 20 percent blending by 2026, benefiting sugar companies and promoting biofuel goals.

The real estate market is projected to grow significantly, requiring Rs 14 lakh crore in debt financing from 2024 to 2026, positively impacting the banking and financial sectors. Major telecom operators have raised tariffs post-election, potentially improving sector financials and paving the way for a sector re-rating.

Major cement players are expanding through acquisitions, expecting 6-7 percent compounded growth, with the top five players likely to dominate the market by March 2025. FMCG companies expect recovery in rural business due to factors like normal monsoons, robust crop yields, and government measures, maintaining strong rural demand.

The potential roll-out of the FAME 3 Scheme to support electric vehicle sales is anticipated, with a budgetary allocation of around Rs 10,000 crore. Sectors such as Auto, Cement, Defence, Railways, Consumer Durables, Energy, and Banking are expected to outperform. Lagging sectors like IT and Specialty Chemicals offer value-buying opportunities at lower levels.

The structural bull market for Indian equity is supported by strong domestic fundamentals and government reforms, with a positive medium- to long-term market outlook. Internationally, the US market showed resilience except for the Dow Jones. The Federal Reserve maintained interest rates at 5.25 to 5.50 percent, awaiting inflation to hit the 2 percent target before considering rate cuts.

The US GDP grew at 1.4 percent annually in Q1 2024, with mixed economic indicators highlighting strengths and challenges. The Indian IPO market has seen a surge in companies seeking to list shares and a rise in capital raised. The first half of 2025 saw strong retail investor participation, reflecting confidence in India's growth prospects. Mahavir Lunawat, Managing Director of Pantomath Capital Advisors Private Limited, noted, 'Favourable market conditions, high liquidity, a conducive growth environment with stable interest rates, and benign inflation have facilitated an IPO boom. The Indian IPO market is poised for a robust year, driven by strong domestic fundamentals and promising growth prospects.'

Lunawat added, 'We are on the brink of sustained, long-term momentum in the IPO market, potentially making this the best year for IPOs. India's solid macroeconomic environment and promising growth prospects create the ideal backdrop for a vibrant IPO market, with robust participation from both domestic institutional investors and retail investors.' With the potential for capex increases and robust primary market activity, the Indian economy is poised for sustained growth.

The upcoming period is expected to see heightened market activity, further IPOs, and economic stability, creating a conducive environment for investment and development. (ANI)

(With inputs from agencies.)