The Maruti 800 is India's top-selling car

The Indian Government is selling a 25% stake in Maruti, which is majority owned by Japanese group Suzuki, and reducing its own holding to about 20%.

The shares were oversubscribed by up to 45%, prompting traders to suggest they could soon leap ahead of their issue price of 118-122 rupees.

"I am a little surprised by the response, but this shows that there is a strong appetite for quality issues in the primary market both with institutions and individuals," said Jamshed Desai, head of research at Taib Securities.

Home and abroad

The issue is expected to raise 8.3bn rupees (£151m; $178m) for the government and revive interest in the flagging equities market.

A report in the India Times suggested foreign investors made up the majority of bids for the offering.

The newspaper suggested only a couple of Indian banks had so far applied for a stake.

The company had been holding roadshows in Delhi and Mumbai, as well as New York and London to attract investors.

It had also run a series of advertisements on television in the past few days, boasting it sold twice the number of cars as its closest domestic competitor.

Market leader

Maruti has a 55% Indian market share, despite growing competition from foreign firms such as Ford and Fiat.

Over the past 10 years, the market has opened up dramatically, and local firms are generally finding it harder to retain market share.

Maruti has also returned double-digit profit growth recently, despite more or less stagnant sales.