Promoter, PE stake sales at Rs 53,000 cr in May; Rs 20,000 cr IPOs coming; eyes on FPI flows

Thanks to strong domestic flows, Sensex and Nifty have managed to deliver 5-6 per cent returns in 2025 so far. That said, promoters and private equity (PE) investors are on a selling spree after the recent market rise. In May alone, promoter and private equity stake sales amounted to approximately Rs 53,000 crore - lower than the peak levels seen in Q4 CY24 but still substantial, Franklin Templeton India MF said in a note.

Franklin Templeton India MF said a pipeline of IPOs worth around Rs 20,000 crore is also expected to hit the market soon, which could further absorb liquidity. Retail participation has also picked up, particularly in the small- and mid-case segments, but could be highly sensitive to global cues and market volatility. FPI flows would, thus, be keenly watched going ahead.

Data showed foreign portfolio investors (FPIs) sold Rs 94,485 crore worth shares in the calendar so far amid ongoing concerns around global trade dynamics and a perceived slowdown in domestic economic momentum.

"Going forward, two key variables will be crucial to monitor: the sustainability of FII inflows and the pace of equity supply through stake sales and IPOs. A favorable balance between these two will be essential to maintain market stability and support valuations,"  Franklin Templeton India MF said.

The MF house said the FPI sentiment has turned positive, with India emerging as a key beneficiary among global emerging markets over the past three months, attracting approximately Rs 29,875 crore. This has provided a supportive backdrop for equities, it said.

"Flows remain a critical factor in shaping the near-term trajectory of Indian equity markets," said Franklin Templeton India MF.

On the earnings front, the ratio of downgrades to upgrades has improved, but much will depend on the macro environment in the second half of FY26.

"Valuations remain elevated, with the Nifty's one-year forward P/E trading above its long-term average at 21X (near the 1 standard deviation mark), though it is supported by India's relative macro strength. Unless a significant negative event occurs, FTI does not anticipate a sharp derating and market returns are likely to mirror earnings growth," the MF house said.