India’s stock market is flying high — maybe too high. In his latest GREED & fear investor note, Christopher Wood, Global Head of Equity Strategy at Jefferies, sounds the alarm: IPO fever and midcap overvaluation might be the cracks forming beneath the rally.
Since April 7, the Nifty 50 has surged 14.1%. The Nifty Midcap 100 is up an even crazier 23.7%. Valuations? Also up — Nifty now trades at 22.2x forward earnings. Midcaps? A whopping 27.1x.
And that’s not just a number.
It’s why companies are rushing to cash in. In May alone, $7.2 billion worth of equity was raised. Another $6 billion has already been placed this June. According to Wood, this IPO-driven equity supply is the key risk for India’s equity market now.
Before the market correction in September 2023, equity issuance averaged about $7 billion per month. Now, that rhythm is back — with fresh IPOs gearing up to flood the market again.
Four major IPOs are expected in just the next week, aiming to raise around ₹15,000 crore (~$1.7 billion). The big one? HDB Financial Services, a subsidiary of HDFC Bank, is launching its much-anticipated $1.4 billion IPO on June 25 — the largest since Hyundai Motor India’s mega issue in 2024.
12 New IPOs Worth Rs 15,800 Cr to Hit Stock Market Next Week; 8 Stocks to List
It’s a market party, yes — but who’s checking the exits?
Beyond IPOs, Wood also sees a shift in investor mindset. Since India’s Budget on February 1, money has moved toward consumption-driven plays, boosted by monetary easing and a rally in consumer finance stocks.
Meanwhile, India’s property market is still riding a five-year upcycle. Lower mortgage rates (now 8%, likely headed to 7.5%) could push housing demand further, especially in affordable and mid-income segments. Pre-sales growth for top developers is expected to jump from 17% in FY25 to 22% in FY26.
But Wood isn’t just warning from the sidelines — he’s acting. He’s exited positions in Larsen & Toubro, Thermax, and Godrej Properties, replacing them with TVS Motor, Home First Finance, and Manappuram Finance. PolicyBazaar and Bharti Airtel also got portfolio upgrades.
In Jefferies’ global and Asia-focused funds, L&T is out. PolicyBazaar and French construction firm Saint-Gobain are in.
So, while India’s market might look like a rocket — it’s worth asking: are we launching, or about to overheat?
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