DEVELOPMENTS IN INDIA’S CAPITAL MARKETS
India’s improving macroeconomicfundamentals, greaterintegration with the worldeconomy, increasing corporate profitability andcompetitiveness is becoming apparent through thedevelopments in its capitalmarket.The likely benefits of investing in a growing economy have inspired theoverseas investors to invest in Indian markets. That is specifically so with theForeign Institutional Investors (FIIs) i.e. pension funds, mutual funds, investment trusts, asset management companies, nominee companies and institutionalportfolio managers who have been investing heavily in the country’s capitalmarkets. The country’s capital market registered a net inflow of US$ 7.97 billionfrom FIIs in 2006 up from US$ 0.7 billion in 2002. The rank of FIIs registered with the market regulator Securities and Exchange Board of India (“SEBI”) haveburgeoned to 1,000 from 488 two years ago.This along with larger participation of domestic investors resulted into a sharpupward movement of Sensex, the benchmark index of Bombay Stock Exchange inIndia’s commercial capital Mumbai. The 21-year-old Sensex that took 10 years toclimb from 1,000 points (in 1990) to touch 6,000 points (in 2000) rallied to the10,000 mark in February, 2006. Sensex that yield a spectacular return of 48.06per cent in 2006 maintained its upward journey in 2007 also and touched the15000 mark in the month of July.The capital market in India is experiencing the next bullish run triggered by the 50basis point rate cut by the US Fed in mid September. The rate cut considerablyeased the liquidity situation which resulted in global investors pumping in billionsof dollars in growth markets like India.