Citi Bankers Predict Strong ECM Pipeline and Oversold Rupee Recovery in 2026
Citibank bankers project strong ECM activity in 2026 with $15-20 billion in IPO volumes driven by high valuations and exit opportunities for private equity firms. The rupee, which hit record lows in 2025, is considered oversold due to tariff uncertainties and expected to recover. Enhanced ECB guidelines from RBI could boost global bond market participation.
*this image is generated using AI for illustrative purposes only.
Citibank's senior bankers expressed optimism about India's financial markets in 2026, predicting continued strength in equity capital markets and potential recovery for the rupee from its recent lows.
Strong ECM Pipeline Expected
Rob Chan, head of ECM syndicate for Asia at Citi, forecasts robust IPO activity in 2026 driven by attractive market valuations. "Valuations are high, which will lead to ECM activity with a lot of private equity, shareholder promoters and foreign controlling shareholders likely to cash in," Chan explained.
The bank projects significant market activity ahead:
| Parameter: | Projection |
|---|---|
| Expected ECM Volume: | $15.00-20.00 billion |
| Market Outlook: | Very active IPO market |
| Key Drivers: | High valuations, strong investor appetite |
| Primary Segments: | Domestic and retail investors |
This optimism follows 2025's exceptional performance, with approximately ₹1.80 lakh crore raised in the primary market. Major transactions included offerings from Tata Capital, HDB Financial Services, and significant offers for sale by LG Electronics India and ICICI Prudential AMC.
Rupee Recovery Anticipated
Nitesh Dugar, head of debt capital markets for South and Southeast Asia at Citibank, believes the rupee's recent weakness may be overdone. The Indian currency fell below ₹85.00 per dollar in 2025 amid geopolitical volatilities and tariff concerns from the Trump administration, which imposed a 50.00% tariff on imports from India.
"The currency is probably a bit oversold. The tariff uncertainty is predominantly media-fuelled," Dugar noted, suggesting negotiations are ongoing and clarity could favor appreciation. Citibank economists expect the rupee to stabilize around ₹85.00 per dollar, indicating the 2025 underperformance may not continue.
ECB Framework Liberalization
The debt capital markets outlook appears promising following the RBI's proposed ECB framework reforms in October. The central bank suggested comprehensive liberalization measures:
| Current Framework: | Proposed Changes |
|---|---|
| Borrowing Limit: | $750.00 million to $1.00 billion annually |
| Alternative Limit: | Up to 300.00% of net worth |
| Cost Caps: | Elimination against 450 basis points spread |
| Eligibility: | Widened access criteria |
Dugar emphasized these changes would create new opportunities for banks and issuers once finalized, likely later in 2026. The reforms aim to make foreign fund access easier for Indian companies by tying fundraising limits to borrowers' financial strength rather than arbitrary caps.
Market Outlook
While India's global bond market activity remained muted in 2025, bankers expect increased participation in 2026. The combination of ECB liberalization, strong domestic investor appetite, and potential rupee stabilization creates a favorable environment for capital market activities.
The banking sector's confidence reflects broader expectations of continued foreign investment interest in Indian markets, supported by strong fundamentals despite recent currency volatility and trade policy uncertainties.
18
