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 Indian food and grocery delivery firm Swiggy is expected to see just modest demand from retail investors for its $1.4 billion IPO even after cutting its hoped-for valuation twice, with momentum for domestic stocks having cooled considerably.

The country's second-largest IPO for the year opened for bids on Wednesday with orders to be taken until Nov.8. The price range is 371-390 rupees.

But while India was an outlier in Asia with a string of high-profile offerings this year, Swiggy's IPO comes after a slide in Indian equities in October that is expected to extend into November. The most recent earnings season has been lacklustre and there is much uncertainty about the U.S. presidential election.

Mahesh Ojha, assistant vice president of research & business development at Hensex Securities, notes that Swiggy's grey market premium - the price at which an IPO-bound company's stock is traded in an unregulated market prior to its listing - is only 5% more than the top end of its price band.

"Interest of retail investors in the IPO is set to be subdued on the back of a modest grey market premium - which most of them look at for listing gains. Most of the retail investors who would subscribe to the issue will do it keeping a medium-to-long-term horizon for returns," Ojha said.

Retail investors have been allotted 10% of the offering while institutional investors have 75%. The rest goes to non-institutional investors such as corporations and high-net-worth individuals.

On Tuesday, anchor investors including Fidelity and Norway's sovereign wealth fund Norges bought shares worth $605 million.

Swiggy has cut its valuation twice by a combined 25% to $11.3 billion, aiming to avoid a "bad" debut. Hyundai Motor India's record $3.3 billion IPO last month has not fared well since listing, with its shares having lost 5.5%.

Swiggy has a solid No. 2 position in India's food and grocery market behind Zomato. In food delivery, it has 34% of the market compared to Zomato's 58%, while in quick commerce, Zomato's Blinkit has an estimated 40-45% and Swiggy's Instamart has 20-25%, according to brokerage estimates.

Swiggy also still has some way to go to match Zomato's financial health, reporting a net loss of 23.5 billion rupees ($280 million) in the year ended March 2024 compared to Zomato's profit of 3.5 billion rupees.

($1 = 84.1900 Indian rupees)