investment options A Presentation November 30, 2006 Indian Economy and Capital Market at a glance
Second fastest growing economies after
China with an average annual growth rate of more than 8 per cent in the last three years India’s growth rate has surpassed some of the developed economies GDP at current market prices is over US $778 billion Indian Economy and Capital Market at a glance Foreign investment can be made in India with specific prior approval in sectors other than those prohibited Foreign investment is now freely allowed in all sectors, including the services sector subject to specified sect oral ceilings except in a few strategically sensitive areas Indian Economy and Capital Market at a glance General permission granted to the Indian companies for issuing rights/bonus shares to the existing nonresident shareholders subject to adherence to sect oral cap Indian companies may issue shares under Employee Stock Option Scheme to its employees who are resident outside Indian Economy and Capital Market at a glance An Indian company can raise foreign currency resources overseas through ADRs or GDRs Foreign Institutional Investors are allowed to invest in India under the Foreign Institutional Investment scheme Portfolio investment limits in individual companies can be raised by Board resolution keeping the overall sect oral cap in view Indian Economy and Capital Market at a glance Investments can be made through foreign venture capital funds Private equity is allowed as an alternative form of investment Qualified Institutional investors are allowed to invest in Indian Depository Receipts floated by foreign companies. FIIs and NRIs can also invest in IDRs after obtaining permission from RBI Indian Economy and Capital Market at a glance
FIIs can make investments in Corporate and
Government Bond markets within the limits
Household Investment in Shares and
debentures as percentage of financial savings at 4.9 per cent Indian Economy and capital market at a glance Market capitalization of Rs.34,62,692 crore or over US $ 770 billion as on November 17, 2006 India is the world’s 12th largest in market capitalization. Market cap-GDP ratio is almost 100 per cent Indian Economy and Capital Market at a Glance
With Sensex crossing 13,000 mark – ahead
of most of the emerging economies with a P/E ratio of 22.01 NSE (India’s National Stock Exchange) is the third largest in the world in the number of trades after NYSE and NASDAQ Indian Economy and Capital Market at a Glance India has 23 small and 2 big stock exchanges The 2 big stock exchanges (National Stock Exchange and Bombay Stock Exchange) account for 90 per cent of trade Over 7000 listed companies on the stock exchanges – largest in the world Indian Economy and Capital Market at a Glance 9040 brokers in cash segment and 1064 in derivative segment of the market 122 investment bankers in the market 58 under writers to support primary issues 34 foreign venture capital funds 120 Portfolio managers Indian Economy and Capital Market at a Glance 11 custodian banks 2 depositories with over 9 million beneficiary owner accounts 120 Portfolio managers Number of traders at 20 million Number of internet trading clients at 1.44 million Internet trading at 12 per cent of total trading Indian Economy and Capital Market at a Glance
Rise in index during the last eighteen
months over 100 per cent Year on year return during the last year at 74 per cent Daily volatility of the market 0.76 per cent to 1.29 per cent 39 mutual funds with over 500 schemes for investment Indian Economy and Capital Market at a Glance Cumulative assets of mutual funds over US$68 billion India launches Capital Protection Fund and Gold Exchange Traded Funds About 1000 foreign institutional investors Indian Economy and Capital Market at a Glance Investors by foreign institutional investors at over $50 billion At current prices, it is around 15 per cent of the total market capitalization Only broad based entities established and incorporated abroad are eligible to be registered as Foreign Institutional investors in India Indian Economy and Capital Market at a Glance
FIIs can invest on behalf of their clients
through sub-accounts For normal FIIs, limit for investment in equity is at least 70 per cent while the rest could be invested in debt up to a maximum limit of 30 per cent Indian Economy and Capital Market at a Glance FIIs could also be dedicated debt funds who can invest up to 100 per cent in debt FIIs can issue overseas derivative instruments like Participatory Notes (PNs) to the entities registered in the country of origin. There are 86 venture capital funds and 54 foreign venture capital investors Most Foreign venture capital funds provide seed capital to firms with enormous growth potential Why invest in Indian capital markets? Business Week says that of 100 emerging market firms which are rapidly globalising 21 are Indian firms Economists project India to become the third largest economy in the world by 2040 Indian capital market regulator has acquired international credibility in the least possible time Why invest in Indian capital markets? India has a disclosure based regime of regulation Disclosure and Investor Protection guidelines available India’s accounting standards are closer to international standards India has a well laid down legal framework Why invest in Indian capital markets? India has T+2 rolling settlement as opposed to T+3 in NYSE. In India the transactions are totally electronic on a real time basis. India has several protective safeguards for the retail investor such as grading system of public offering, retail quota at 25 per cent etc. Why invest in Indian capital markets? SEBI has made corporate governance guidelines mandatory for listed companies Mutual funds are permitted to invest overseas up to $3 billion Margin trading is in vogue Corporatisation and demutualization of stock exchanges on card - foreign participation in bourses permitted. Why invest in Indian capital markets? As an integral part of risk management trading and exposure limits, var margins and mark to market margins are in vogue Clearing houses and corporations with novation in place Almost 100 per cent risk free electronic settlement through depository system SEBI has a surveillance and enforcement system in place Why invest in Indian capital markets?
India to become a regional hub for bond
trading once a free financial zone is set up India to set up a world class National Institute for Securities Markets with 7 business schools under its fold