Morgan Stanley Forecasts Continued Growth in IPO Market, No Near-Term Liquidity Concerns
Morgan Stanley Sees Continued Support for Equities from India's IPO Wave
India's primary market has enough room to absorb fresh equity issuances without disrupting the broader market rally, according to Morgan Stanley. The brokerage firm believes that the current wave of initial public offerings (IPOs) could continue to support equities for several more months before supply becomes excessive.
In its latest India Equity Strategy Playbook, Morgan Stanley notes that India's primary market in 2025 was one of the busiest globally, with a steady pipeline continuing in 2026 of mainboard IPOs, block deals, and Qualified Institutional Placements (QIPs) vying for investor capital. The brokerage's assessment suggests that the market is yet to reach a point where the growing supply of paper begins to materially crowd out demand for listed equities.
Morgan Stanley's optimism stems largely from the strength of domestic liquidity and improving macro conditions. The firm expects India's growth trajectory to strengthen and believes the country's equity market continues to benefit from robust domestic inflows, a supportive policy backdrop, and an investment cycle that is gradually gathering pace. Key indicators supporting this view include a potential rise in India's investment-to-GDP ratio to 37.5% over the next five years, moderate real rates, fiscal stability, and an undervalued currency.
