Zerodha CEO Nithin Kamath has highlighted a striking disconnect between India's resilient IPO market and the struggling secondary market. While the Nifty 50 remains 14.3% below its peak following an RBI rate hike to 5.5%, over 67% of recent IPOs are trading above their issue prices.
Zerodha CEO Nithin Kamath has drawn attention to an unusual split in the Indian equity markets. In a market where established indices are facing significant pressure, the primary market—where companies raise money through Initial Public Offerings (IPOs)—continues to show remarkable strength, creating a scenario that investors are finding difficult to reconcile with broader economic conditions.
This divergence is backed by data from the past year, spanning October 2025 to September 2026. During this period, 67.2% of companies that listed on the mainboard are trading above their original issue prices, delivering a median return of 24.7% for investors. This suggests that liquidity is actively flowing into new listings even as it exits the secondary market, where long-term investors typically hold shares.
In sharp contrast, the secondary market is battling persistent headwinds. The Nifty 50, a key barometer for the Indian stock market, closed at 22,603 on October 7, 2026. This reflects a decline of approximately 14.3% from its all-time high of 26,373.20. The struggle in the secondary market is compounded by broader macroeconomic pressures, including geopolitical instability and rising global oil costs, which have weighed heavily on investor sentiment.
The cautious sentiment in the secondary market is further influenced by the Reserve Bank of India’s (RBI) latest policy decision. On October 7, 2026, the central bank raised the repo rate by 25 basis points to 5.5%. A higher repo rate increases borrowing costs for businesses and individuals, which often leads to reduced corporate earnings and tighter liquidity in the financial system. When borrowing becomes expensive, investors tend to reassess the valuations of established companies, contributing to the selling pressure seen in the secondary market.
For investors, this split poses a clear question: how long can the primary market remain detached from the reality of the secondary market? If the secondary market continues to face a slump, the demand for new IPOs may eventually cool. Institutional and retail liquidity is finite, and a sustained downturn in established indices often leads to a broader risk-off environment, where investors become more selective regardless of whether a company is new or established.
Moving forward, the key monitorables include the stability of the Nifty 50 and any further signals from the RBI regarding its interest rate trajectory. Investors may track whether the current primary market momentum can be sustained in an environment of higher interest rates, or if the secondary market's bearish trend eventually catches up with new listings.