Kotak Investment Banking has projected a strong performance for India's equity capital markets in calendar year 2026, with total issuance volumes expected to cross ₹6 lakh crore. The optimistic outlook is supported by a robust pipeline spanning initial public offerings, qualified institutional placements, block deals, and yield-oriented investment products.

IPO Market to Lead Growth

The IPO segment is positioned to be a major contributor to the projected growth, with issuance volumes expected to reach approximately ₹2.5 lakh crore in CY26. According to V Jayasankar, managing director at Kotak Mahindra Capital Company, billion-dollar-plus IPOs will play a significant role in driving this growth.

"A lot of billion-dollar-plus IPOs will happen, and probably anywhere between 35% of the fundraise will be from large IPOs," Jayasankar stated during a press briefing. New-age technology and consumer-facing companies are expected to continue dominating the IPO landscape, maintaining their position as frontrunners in fundraising activities.

Mixed Performance in CY25

The positive CY26 outlook follows a mixed year for equity capital markets in CY25. Overall ECM volumes experienced an 18% year-on-year decline, falling to ₹5.1 lakh crore from ₹6.1 lakh crore in CY24. However, IPO activity demonstrated resilience, bucking the broader trend with 13% growth despite global volatility and risk-off market conditions.

Domestic Institutional Investors Drive Market Activity

Domestic institutional investors are expected to remain the primary drivers of ECM activity in CY26. In CY25, DIIs played a crucial role in market stability by absorbing foreign outflows of nearly $19 billion, supported by substantial DII inflows of approximately $90 billion.

The participation of domestic institutions in anchor books has increased significantly, rising from 40% in CY24 to nearly 60% in CY25. This enhanced participation demonstrates the growing confidence and capacity of domestic investors in supporting large-scale public offerings.

Diversified Growth Across Segments

Beyond IPOs, Kotak Investment Banking expects continued strength across multiple market segments. Mergers and acquisitions activity is projected to improve, with deal volumes expected to rise 10-15% in CY26. Yield-oriented products, including real estate investment trusts and infrastructure investment trusts, are anticipated to continue attracting capital.

Qualified institutional placements and block deals are expected to remain robust in CY26, with rising average deal sizes indicating a year of mega issuances across the equity capital markets landscape.

Kotak Investment Banking projects a robust 10-15% growth in overall mergers and acquisitions volumes for 2026, driven by multiple structural and cyclical factors that continue to support India's position as a key global M&A market. The optimistic outlook comes as India's M&A market demonstrated strong resilience in 2025, registering significant growth despite global headwinds.

Strong Market Performance in 2025

India's M&A market delivered impressive results in 2025, with deal values reaching $121 billion, representing a 14% year-on-year increase. This growth occurred against a challenging global backdrop where worldwide M&A volumes declined by nearly 15% compared to the previous year. According to Sourav Mallik, Managing Director and Deputy CEO of Kotak Investment Banking, India continues to remain among the top 10 M&A markets globally, underlining the country's growing relevance in cross-border transactions and strategic consolidation.

Sector-Wise Activity and Trends

Financial services, technology, consumer, and healthcare sectors are expected to be the most active in 2026. In 2025, financial services, technology, and industrials accounted for nearly 65% of total M&A deal value, driven by strong credit growth expectations, robust inbound capital flows, and sustained demand for technology assets. A notable trend was the increasing prominence of listed-company M&A, with listed targets accounting for nearly 30% of deal value, up from 20% the previous year. Nine of the top 15 transactions by value involved listed companies, reflecting greater comfort with public-market acquisitions.

Cross-Border Transaction Dominance

Cross-border transactions continued to dominate India's M&A landscape, representing almost 70% of total deal volumes. The composition showed inbound deals at 47%, while outbound transactions rose to 23%, marking a structural increase compared to previous years. This trend underscores India's growing role as both a destination for global capital and a source of outbound strategic investments.

Corporate Balance Sheet Strength

Indian corporates are well-positioned to accelerate consolidation activities, supported by strong balance sheets and favorable financial metrics. Corporate leverage remains low at around 0.5x on average, with interest coverage close to 5x, providing significant headroom for acquisitions, spin-offs, and carve-outs. Corporate and strategic buyers remained the primary drivers of deal activity, with ten of the top 15 transactions by value led by strategic or corporate acquirers, highlighting India Inc.'s balance-sheet strength and long-term confidence.

Investment Activity and Market Dynamics

Minority investments staged a strong comeback, contributing 36% of overall deal value, with nearly half of that activity concentrated in digital and enterprise technology sectors, supported by strong AI-led growth tailwinds. Financial sponsors are expected to remain a key pillar of activity, backed by ample dry powder and improved valuation comfort. Secondary market valuations have moderated back to five-year historical averages, with sponsors raising India-focused capital and showing increased comfort in owning controlling stakes in listed companies. A notable structural shift includes the emergence of family offices and high-net-worth individuals as a distinct and growing investor category in M&A transactions.