India, March 4 -- After two record-breaking years for IPOs in India, the prospect of a prolonged issuance drought is rapidly materialising on Dalal Street-thanks to the Iran war's impact on stock market.

Potential IPO candidates now face a challenging environment characterised by heightened market volatility, which is actively denting investor appetite and severely clouding visibility on corporate valuations.

According to data compiled by Bloomberg, Indian companies have raised $1.5 billion in the current quarter from primary offerings, versus $2.3 billion raised during the same period last year.

This contraction is the clearest indicator yet that one of the world's most vibrant venues for IPOs is decisively cooling. The retreat is com...