indias capital market

8/8/2019 Indias Capital Market

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Indias capital marketIndias capital market

investment optionsinvestment options

A PresentationA Presentation

November 30, 2006November 30, 2006


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Indian Economy and Capital MarketIndian Economy and Capital Market

at a glanceat a glance

Second fastest growing economies afterSecond fastest growing economies after

China with an average annual growth rate ofChina with an average annual growth rate ofmore than 8 per cent in the last three yearsmore than 8 per cent in the last three years

Indias growth rate has surpassed some ofIndias growth rate has surpassed some of

the developed economiesthe developed economies GDP at current market prices is over USGDP at current market prices is over US

$778 billion$778 billion


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at a glanceat a glance Foreign investment can be made in IndiaForeign investment can be made in India

with specific prior approval in sectors otherwith specific prior approval in sectors other

than those prohibitedthan those prohibited Foreign investment is now freely allowed inForeign investment is now freely allowed in

all sectors, including the services sectorall sectors, including the services sectorsubject to specified sect oral ceilings exceptsubject to specified sect oral ceilings exceptin a few strategically sensitive areasin a few strategically sensitive areas


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at a glanceat a glance General permission granted to the IndianGeneral permission granted to the Indian

companies for issuing rights/bonus sharescompanies for issuing rights/bonus shares

to the existing nonresident shareholdersto the existing nonresident shareholderssubject to adherence to sect oral capsubject to adherence to sect oral cap

Indian companies may issue shares underIndian companies may issue shares underEmployee Stock Option Scheme to itsEmployee Stock Option Scheme to itsemployees who are resident outsideemployees who are resident outside


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at a glanceat a glance An Indian company can raise foreign currencyAn Indian company can raise foreign currency

resources overseas through ADRs or GDRsresources overseas through ADRs or GDRs

Foreign Institutional Investors are allowed to investForeign Institutional Investors are allowed to investin India under the Foreign Institutional Investmentin India under the Foreign Institutional Investmentschemescheme

Portfolio investment limits in individual companiesPortfolio investment limits in individual companies

can be raised by Board resolution keeping thecan be raised by Board resolution keeping theoverall sect oral cap in viewoverall sect oral cap in view


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at a glanceat a glance Investments can be made through foreignInvestments can be made through foreign

venture capital fundsventure capital funds

Private equity is allowed as an alternativePrivate equity is allowed as an alternativeform of investmentform of investment

Qualified Institutional investors are allowedQualified Institutional investors are allowedto invest in Indian Depository Receiptsto invest in Indian Depository Receipts

floated by foreign companies. FIIs and NRIsfloated by foreign companies. FIIs and NRIscan also invest in IDRs after obtainingcan also invest in IDRs after obtainingpermission from RBIpermission from RBI


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at a glanceat a glance

FIIs can make investments in Corporate andFIIs can make investments in Corporate and

Government Bond markets within the limitsGovernment Bond markets within the limits

Household Investment in Shares andHousehold Investment in Shares and

debentures as percentage of financialdebentures as percentage of financialsavings at 4.9 per centsavings at 4.9 per cent


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Indian Economy and capital marketIndian Economy and capital market

at a glanceat a glance Market capitalization of Rs.34,62,692 croreMarket capitalization of Rs.34,62,692 crore

or over US $ 770 billion as on November 17,or over US $ 770 billion as on November 17,

20062006 India is the worlds 12India is the worlds 12thth largest in marketlargest in market

capitalization.capitalization.

Market capMarket cap--GDP ratio is almost 100 per centGDP ratio is almost 100 per cent


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at a Glanceat a Glance

With Sensex crossing 13,000 markWith Sensex crossing 13,000 mark aheadahead

of most of the emerging economies with aof most of the emerging economies with aP/E ratio of 22.01P/E ratio of 22.01

NSE (Indias National Stock Exchange) isNSE (Indias National Stock Exchange) is

the third largest in the world in the numberthe third largest in the world in the numberof trades after NYSE and NASDAQof trades after NYSE and NASDAQ


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at a Glanceat a Glance India has 23 small and 2 big stockIndia has 23 small and 2 big stock

exchangesexchanges

The 2 big stock exchanges (National StockThe 2 big stock exchanges (National StockExchange and Bombay Stock Exchange)Exchange and Bombay Stock Exchange)account for 90 per cent of tradeaccount for 90 per cent of trade

Over 7000 listed companies on the stockOver 7000 listed companies on the stockexchangesexchanges largest in the worldlargest in the world


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at a Glanceat a Glance 9040 brokers in cash segment and 1064 in9040 brokers in cash segment and 1064 in

derivative segment of the marketderivative segment of the market

122 investment bankers in the market122 investment bankers in the market

58 under writers to support primary issues58 under writers to support primary issues

34 foreign venture capital funds34 foreign venture capital funds

120 Portfolio managers120 Portfolio managers


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at a Glanceat a Glance 11 custodian banks11 custodian banks

2 depositories with over 9 million beneficiary2 depositories with over 9 million beneficiary

owner accountsowner accounts 120 Portfolio managers120 Portfolio managers

Number of traders at 20 millionNumber of traders at 20 million

Number of internet trading clients at 1.44Number of internet trading clients at 1.44millionmillion

Internet trading at 12 per cent of total tradingInternet trading at 12 per cent of total trading


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Rise in index during the last eighteenRise in index during the last eighteen

months over 100 per centmonths over 100 per cent Year on year return during the last year atYear on year return during the last year at

74 per cent74 per cent

Daily volatility of the market 0.76 per cent toDaily volatility of the market 0.76 per cent to

1.29 per cent1.29 per cent 39 mutual funds with over 500 schemes for39 mutual funds with over 500 schemes for

investmentinvestment


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at a Glanceat a Glance Cumulative assets of mutual funds overCumulative assets of mutual funds over

US$68 billionUS$68 billion

India launches Capital Protection Fund andIndia launches Capital Protection Fund andGold Exchange Traded FundsGold Exchange Traded Funds

About 1000 foreign institutional investorsAbout 1000 foreign institutional investors


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at a Glanceat a Glance Investors by foreign institutional investors atInvestors by foreign institutional investors at

over $50 billionover $50 billion

At current prices, it is around 15 per cent ofAt current prices, it is around 15 per cent ofthe total market capitalizationthe total market capitalization

Only broad based entities established andOnly broad based entities established and

incorporated abroad are eligible to beincorporated abroad are eligible to beregistered as Foreign Institutional investorsregistered as Foreign Institutional investorsin Indiain India


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FIIs can invest on behalf of their clientsFIIs can invest on behalf of their clients

through subthrough sub--accountsaccounts For normal FIIs, limit for investment in equityFor normal FIIs, limit for investment in equity

is at least 70 per cent while the rest could beis at least 70 per cent while the rest could be

invested in debt up to a maximum limit of 30invested in debt up to a maximum limit of 30per centper cent


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at a Glanceat a Glance FIIs could also be dedicated debt funds who canFIIs could also be dedicated debt funds who can

invest up to 100 per cent in debtinvest up to 100 per cent in debt

FIIs can issue overseas derivative instruments likeFIIs can issue overseas derivative instruments likeParticipatory Notes (PNs) to the entities registeredParticipatory Notes (PNs) to the entities registeredin the country of origin.in the country of origin.

There are 86 venture capital funds and 54 foreignThere are 86 venture capital funds and 54 foreign

venture capital investorsventure capital investors Most Foreign venture capital funds provide seedMost Foreign venture capital funds provide seed

capital to firms with enormous growth potentialcapital to firms with enormous growth potential


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Why invest in Indian capitalWhy invest in Indian capital

markets?markets? Business Week says that of 100 emergingBusiness Week says that of 100 emerging

market firms which are rapidly globalising 21market firms which are rapidly globalising 21

are Indian firmsare Indian firms Economists project India to become the thirdEconomists project India to become the third

largest economy in the world by 2040largest economy in the world by 2040

Indian capital market regulator has acquiredIndian capital market regulator has acquiredinternational credibility in the least possibleinternational credibility in the least possibletimetime


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markets?markets? India has a disclosure based regime ofIndia has a disclosure based regime of

regulationregulation

Disclosure and Investor ProtectionDisclosure and Investor Protectionguidelines availableguidelines available

Indias accounting standards are closer toIndias accounting standards are closer to

international standardsinternational standards India has a well laid down legal frameworkIndia has a well laid down legal framework


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markets?markets? SEBI has made corporate governanceSEBI has made corporate governance

guidelines mandatory for listed companiesguidelines mandatory for listed companies

Mutual funds are permitted to investMutual funds are permitted to investoverseas up to $3 billionoverseas up to $3 billion

Margin trading is in vogueMargin trading is in vogue

Corporatisation and demutualization of stockCorporatisation and demutualization of stockexchanges on cardexchanges on card -- foreign participation inforeign participation inbourses permitted.bourses permitted.


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markets?markets?

India to become a regional hub for bondIndia to become a regional hub for bond

trading once a free financial zone is set uptrading once a free financial zone is set up India to set up a world class NationalIndia to set up a world class National

Institute for Securities Markets with 7Institute for Securities Markets with 7

business schools under its foldbusiness schools under its fold

indias capital market

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