Professional Documents
Culture Documents
Indian Investment
Markets
Group 10
Jeet Juneja F20
Himanshu Garg F14
Sagar Sonkar F44
Bratin Dutta F57
Introduction
The term Globalisation means integration of
economies and societies through cross-country
flows of information, ideas, technologies, goods
& services, capital, finance and people
Globalisation occupies a significant place in the
economic development of any country as it
promotes faster economic growth
Experiences showed that globalised countries
financial markets improved their economic
performance at a much faster pace
The changes
Industrial licensing was made easy
Foreign Institutional Investors (FIIs) were
allowed to participate in the equity market
SEBI was established on par with Securities
Exchange Commission (SEC) of the USA
Abolition of government control on pricing
of securities
Exemption of dividend income from income
tax
Contd.
Setting up of regulatory bodies like SEBI
Major findings
The exponential growth rate of real GDP
before globalisation, say 1991 was 5.3 and
post globalisation showed 6 per cent growth
rate
The total risk in investment in equities can be
reduced by investing in diversified portfolio
Market Capitalisation ratio has touched 1.11
per cent in 2004-05 and now it is on par with
international standards
2009-2010
2010-2011
2011-2012
2012-2013
Debt
2500
9451
35611
4974
Equity
Of which
IPOs
No. of IPOs
Mean IPO
size
46736
24696
39
633
48654
35559
53
671
12857
5904
34
174
13050
6043
20
302
Private
Placement
212653
218785
261282
263644
Total
261871
309750
281667
276890SEBI
Source:
Date
Event
1992
1993
1995
1997
1999
1999
2000
2001
2002
Fungibility of ADR/GRD
2007
2008
2009
2009
2010
2012
A study by Mckinsey on
the changes
Mckinsey points out that till 2001, the
reforms had not produced much
financial deepening
The total value of the financial assets
never exceeded the GDP by more than
10% till then
Then deepening started in a major way
and by 2004, the total value of the
financial assets stood at a respectable
160% of the GDP which further
exploded to 305% in 2007
Studys findings
continued..
This meant a CAGR of about 11% between 2001 and
2007
During this period the equity markets showed the most
stunning increase( from 23% of GDP to 165%, a CAGR
of 39%)
corporate bonds showed equally remarkable gains but
on an insignificant base (1% to 7.3%; a CAGR of 39%)
(Chakrabarti, 2010)
Government securities showed a relatively moderate
rise (27% to 63%; a CAGR of 15%) while Bank deposits
rose at a snails pace (57% to 69%; a CAGR of 3%).
Trends in Foreign
US $
Investment
Inflows
Million
Future Prospects
After the shock of the global financial crisis, emerging
as well as developed economies are trying to figure out
whether openness is necessary for a healthy financial
sector
India has a choice between two pathways, as to how to
progress in the future
The two pathways are, either to retreat from the
current position of further liberalizing the financial
sector, which would eventually result in lower growth,
or either to advance forward with gradually
liberalizing but at the same time regulating and
controlling the cross border capital flows
Future Prospects
continued
The retreat scenario is one which is
shaped by a high degree of risk aversion
one that may squeeze the financing needed
for investment in innovation and R&D,
business expansion, infrastructure, housing,
education, and human capital development
If the trend of retreat is to be chosen, the
value of financial assets relative to GDP
would remain flat or even decline by 2020
Future Prospects
continued
Greater integration of the Indian capital market
Thank You