India’s stock market has been performing exceptionally well this year in 2024, with two major stock indexes Nifty 50 and BSE Sensex rising by 19 per cent and 17 per cent, respectively. These record gains reflect strong investor confidence and a thriving economy. This surge in the stock market has created a favourable environment for companies that directly serve consumers (such as food delivery services, retail, and healthcare companies) to raise money by going public through Initial Public Offerings (IPOs).
India’s economy is growing rapidly, and it is expected to become the third-largest consumer market in the world by 2027. This growth is being driven by sectors like healthcare, transportation, and essential goods (consumer staples). As more people in India are spending on these everyday needs, companies in these sectors are looking to take advantage of the favourable market conditions by listing their shares on the stock exchange. This allows them to raise money to expand their businesses and tap into India’s booming consumer market.
Atul Singh, the CEO of LGT Wealth India, points out that India’s economic growth is largely being fueled by private consumption, meaning everyday people are spending more on goods and services. This rise in consumer spending is encouraging more companies that sell directly to consumers (known as business-to-consumer or B2C companies) to go public by launching Initial Public Offerings (IPOs) to raise money.
In 2023, the number of IPOs in India reached a nine-year high with 238 companies going public, raising Rs 614 billion ($7.35 billion). This growth has continued into 2024, with 264 IPOs so far. One of the biggest upcoming IPOs is Hyundai Motor India, which is aiming to raise $3 billion. If successful, this would be the largest IPO in India’s history, surpassing the previous record set by Life Insurance Corporation.
The electric vehicle (EV) market has also seen significant activity. In August 2024, Ola Electric, an electric scooter manufacturer, went public and saw its shares rise by 20% on the first day of trading. This success in the EV sector is expected to inspire more companies, especially those offering smaller-ticket consumer items, to follow suit. For instance, food delivery company Swiggy is preparing for its IPO, following its competitor Zomato, which went public in 2021. Zomato’s shares have risen by 120 per cent this year, showing that even companies initially not making a profit can still see success after going public. Swiggy’s IPO is part of a larger trend where companies raise capital to expand their businesses rather than focusing immediately on profits.
Jewelry companies in India are benefiting from the country’s booming stock market. One example is PN Gadgil Jewellers, which recently had a successful Initial Public Offering (IPO), making a strong entry into the stock market. Other jewelry companies like Senco Gold and Motisons Jewellers have also seen impressive growth, with their stock prices increasing by 108 per cent and 211 per cent this year.
A key reason for this success is the high demand for gold, which plays a significant cultural role in India. Gold is not only seen as a valuable investment but also holds deep cultural significance, especially during festivals like Dhanteras. This festival is considered an auspicious time to buy gold, leading to a surge in jewelry purchases. As a result, the jewelry sector is thriving, with both consumer demand and stock market performance supporting its growth.
Amid the wave of consumer-driven sectors capturing the spotlight, financial firms like Bajaj Housing Finance are also making their mark. When Bajaj Housing Finance went public in September 2024, it didn’t just quietly enter the market it made a splash. Its shares soared 130 per cent from their initial price, catching the eye of retail investors. This surge reflects a larger trend: as India’s economic growth story unfolds, investors are increasingly drawn to companies that play a crucial role in the country’s development.
As the stock market buzz continues, consumer-driven sectors such as jewelry, electric vehicles, and financial services are leading the way. These industries are thriving, and the momentum shows no signs of slowing down. With India poised for continued economic expansion, its stock market is set to grow, fueled by a diverse mix of companies eager to ride the wave of opportunity.
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