ECM activity could hit $70 bn in 2026 as valuations improve:Kotak Investment Banking's V Jayasankar

V. Jayasankar, Managing Director and Board Member, Kotak Investment Banking.

Despite another record year for the Indian primary market, overall equity capital market (ECM) activity across IPOs, QIPs (qualified institutional placements) and block deals witnessed a significant drop in 2025 to $55 billion.

However, after a volatile and largely sideways 2025, India’s equity capital markets could be headed for a meaningful recovery in the coming year, with overall fund-raising potentially climbing back to around $70 billion, according to V. Jayasankar, Managing Director and Board Member, Kotak Investment Banking.

“Equity market sentiment for 2026 is looking positive, compared to the sideways movement in 2025,” Jayasankar said in an interaction with Moneycontrol, pointing to a combination of easing macro uncertainties, improving corporate earnings and more attractive valuations.

“Some of the geopolitical issues that caused volatility earlier are now better factored by the markets. Corporate earnings have started improving over the last couple of quarters, which gives investors greater confidence that Indian corporates are poised to deliver attractive performance, going forward," he said.

He added that India’s macroeconomic growth, policy stability and valuation correction of last year provides strong momentum for ECM activity.

“Markets had been sideways during 2025, muting returns for investors. Valuations have corrected closer to long-term historical averages, making markets attractive once again,” Jayasankar said, noting that this shift is already reflected in investor response to recent deals. “That has already been reflected in the response to some recent large QIPs that we managed, including SBI, Swiggy and Brookfield REIT (Real Estate Investment Trust), where investor demand was very strong. ”

According to Jayasankar, investor confidence today is materially stronger than it was at the start of 2025.

“When you speak to mutual fund managers today, you sense a much higher degree of confidence than what prevailed at the beginning of 2025, when investors were far more tentative and cautious,” he said. Taken together, macro stability, improving earnings and more reasonable valuations are creating conditions supportive of a broader ECM recovery. “Against this backdrop, we expect overall ECM activity to rise from roughly $55 billion in 2025 to about $70 billion in 2026,” he said.

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IPO momentum to remain strong

Jayasankar expects IPOs to continue driving a large share of ECM activity in 2026. “Our expectation is that IPOs will continue to be very robust,” he said. Based on filings and the visible pipeline, IPO fund-raising could reach around $25 billion in 2026, up from roughly $21.5 billion in 2025.

“There are several transactions lined up, both announced and in confidential filing mode,” he said, adding that IPO activity should show healthy growth even as other ECM segments recover.

Block deals, which were muted in 2025, are also expected to rebound. “Blocks should also recover from the subdued levels seen in 2025,” Jayasankar said, estimating they could move back towards $30 billion. Improved market sentiment and exit opportunities for foreign promoters, private equity investors and domestic promoters are likely to support this recovery.

QIPs, meanwhile, are expected to stage a measured rebound, though not to the elevated levels seen in 2024.

“QIPs will recover as well, but not to the elevated levels we saw in 2024,” Jayasankar said. He expects QIP volumes in the range of $10–13 billion in 2026, depending on acquisition activity and funding requirements linked to M&A. “Overall, that still represents a meaningful recovery from 2025, even if it doesn’t reach the exceptional highs of 2024,” he added.

Also Read: Selective recovery likely for QIP market in 2026 after a subdued 2025

Why QIPs may stay below 2024 peaks

He believes the surge in QIPs in 2024 was driven by one-off factors, and it is unlikely to be repeated immediately.

“In our view, 2024 was somewhat unusually good for QIPs,” he said, citing heavy fund-raising by real estate companies and PSU banks that year. “Many real estate companies raised growth capital that should last them for the next couple of years, including calendar 2026.”

A similar dynamic applies to banks and NBFCs. “Most of them are currently very well capitalised,” Jayasankar said. PSU banks raised capital in 2024, while SBI tapped the market in 2025 for the largest-ever QIP of Rs 25,000 crore, reducing the immediate need for fresh equity. As a result, QIP volumes in 2026 are expected to be only modestly higher than 2025 levels.

IPO strength masked broader slowdown in 2025

While IPO headlines in 2025 suggested strength, Jayasankar said the broader ECM picture told a different story. “What gets noticed most is IPO activity, while non-IPO ECM activity—QIPs and blocks—often gets less attention, even though it is larger in aggregate,” he said.

Overall ECM activity fell sharply from about $74 billion in 2024 to roughly $55 billion in 2025. While IPO fund-raising grew from around $19 billion to about $21.5 billion, QIPs dropped from about $20 billion to roughly $10 billion, and block deals declined from about $34 billion to around $23.5 billion. “So when you look at the overall picture, the slowdown was driven primarily by QIPs and blocks, not IPOs,” Jayasankar said.

Sectoral breadth, domestic capital key themes

Looking ahead, Jayasankar expects digital and internet technology companies to remain an important contributor, though India’s ECM landscape remains more diversified than markets like the US. In 2025, financial services was the largest sector, accounting for around 16–18 percent of ECM activity, followed by telecom and internet technology.

At the same time, strong domestic institutional flows have reshaped the market structure. Since 2022, domestic inflows have been around $200 billion, helping domestic banks play a much larger role across sectors such as financial services, real estate and infrastructure. Foreign banks, Jayasankar noted, continue to retain an edge mainly in MNC block deals, where global relationships play an important role.