The Indian stock market witnessed a long decline in the recent past. FIIs' selling is being said to have played a major role in the continuous decline in the market. In the last few months, due to FIIs' selling, the market cap of companies listed in the stock market has decreased by Rs 50 lakh crore. However, the latest report has come that FIIs are investing heavily in the IPO market.

Foreign investors have been pulling out record funds from Indian stocks since October and investing in initial public offerings (IPOs) in search of better returns. In the last few days, we have seen strong listing gains in many IPOs.

According to data published by Central Depository Services Limited, their primary market purchases, including IPOs and preferential share selling, reached $11.5 billion this year, surpassing the previous record set in 2021.

In contrast, global funds have sold more than $13 billion on the exchanges, leading to a decline in the main NSE Nifty 50 index. The sell-off is so high and rapid that the Nifty 50 index is trading 10% below its 52-week high.

Deven Choksey, Managing Director, DR Choksey Finserv Private Limited, said that foreign investors are investing in new papers as they have the potential to generate returns at a very fast pace. Meanwhile, sales in the secondary market are shaped by expensive valuations.

India has become a hotspot for dealmaking, with companies raising a record $28.4 billion from IPOs and primary share offerings this year, according to data compiled for Bloomberg by PrimeDatabase.com. That's more than double the capital raised in 2023. The

Enthusiasm for new listings has also continued in their post-listing performance, with IPOs rising an average of 24% on their first trading day this year, the data shows. The Nifty has fallen more than 10% from its all-time high in September but is still trading at close to 20 times its 12-month forward earnings.

Yet some big-ticket public issues have struggled despite the surge. Hyundai Motor Co.'s Indian unit saw its $3.3 billion IPO - India's biggest ever - list at a discount as retail investors shied away from IPOs overvaluation and growth concerns. Shares of Ola Electric Mobility Ltd are trading below their IPO price after nearly doubling in value in the first six sessions since listing in early August.

Mike Sell, head of global emerging market equities at London-based Alquity Investment Management Ltd, said clients feel it is a good time to enter India. He said the case for strategic investors to invest in India remains "absolutely stable" despite the recent sell-off.