Skip to main content

INDIAN MARKET MORE VIBRANT

Can raise upto Rs.6.8 Lakh Crores per year

BSE CEO Ashish Chauhan

Indian stock market can raise USD 100 billion of capital annually going ahead to help meet the country's funding needs, top bourse BSE's CEO Ashish Chauhan has said while pegging the amount estimated to be raised through his exchange alone at USD 30 billion this fiscal. He said the capital markets have the potential to contribute nearly half of the estimated USD 2 trillion of funding required over the next ten years for infrastructure building, setting up of new businesses, expansion of existing businesses, creation of jobs and other requirements to drive India's growth story. In an interview to PTI, Chauhan said this target is "completely doable" given the high savings rate of Indians and what is required is channelising of these savings into financial market instruments. Chauhan said the debt market in India would need to play a much larger role than equities, which was the case globally, for such high levels of fund raising activities, while he asserted that the necessary infrastructure and technology is there already in place for meeting these targets. The chief of Asia's oldest bourse, who recently steered a highly successful IPO of the exchange that was pending for almost a decade, said one of the biggest functions for the markets is capital formation. "India will need USD 2-2.5 trillion of funds over the next ten years and for that the exchanges would also have to stand up and get counted. India cannot raise funds only through banks. "So, if half of the funds are raised through markets and half through the banks, then a trillion dollars would have to be raised through the exchanges, whether from the GIFT City (international financial centre) or from the domestic exchanges.  "Raising USD 1 trillion over a ten-year period would mean nearly USD 100 billion a year. As of now, BSE alone is helping raise from equity and debt put together, nearly USD 28-30 billion for the current fiscal. It's not yet close to USD 100 billion, but that target is doable," he said. Chauhan said there is also a need to ensure that the entire paraphernalia, in terms of peripheral systems, also keeps pace. Asked whether there was the right kind of infrastructure for such kind of fund raising activities, he replied in affirmative. Talking about the availability of such huge amount of funds in the country, he said India's GDP is around USD 2.5 trillion and India saves around 35 per cent. 
"So basically we are saving around USD 750 billion a year. If we assume a growth of 7 per cent per annum, you are going to be saving close to USD 10 trillion over the next ten years.  "Out of this, if we raise USD 2 trillion, that would still be only 20 per cent. So, India has a lot of funds which are being saved and it is our duty -- of the people running the financial market institutions -- to create that trust and get people to invest through the markets into various instruments." Talking about the mandate for stock exchanges and others in the marketplace, he said secondary markets and the derivatives need to be the part of the overall scheme of things in how the markets can help the central government, states, municipalities and others raise funds for creating infrastructure, companies and jobs, as also for business expansion and other needs. "If we are able to do that then basically if India was to grow at 7 per cent, then India may very well grow at 8-9 per cent if we are able to fund India's growth from within.  "This way the people who are investing would also get good returns for their investments and the companies would be able to raise funds at much more competitive rates." Chauhan said the recent introduction of bankruptcy code will also help give a big boost to the bond market and termed it a "very significant reform that has taken place without much talk about it". "Traditionally, debt markets have been larger than equity markets in the world. It is only India that the listed debt is around one-fifth of the listed equities and it is other way round in most other markets. "This means, there is a huge upside in the bond markets in terms of raising funds. Going ahead, if we have to target USD 100 billion a year of fund raising through markets, bonds would need to play a much larger role." "I personally feel, most people should invest in government bonds," he said.

Comments

Popular posts from this blog

JIO TARIFF CICK FOR TELECOM STOCKS

Telecom stocks today surged up to 8 per cent after the recent increase in Reliance Jio tariffs, which is largely seen as positive for the sector. Shares of Bharti Airtel jumped 4.99 per cent to close at Rs 497.50 on BSE. Bharti Airtel was the biggest gainer among the 30-share index components. The scrip of Idea Cellular soared 7.74 per cent to end at Rs 98.15 and Reliance Communications zoomed 7.60 per cent to Rs 17.70. Reliance Jio made its service dearer by about 15 per cent for its popular 84-day plan at Rs 459 from October 19, under which subscribers get 1GB 4G data at high speed per day. The company restructured its various schemes by reducing their validity period. The recent increase in Reliance Jio tariffs will increase its average revenue per user by up to 20 per cent and is a positive for the telecom sector, which is seeing a rapid consolidation, says a Philip Capital report. Established telecom sector players have seen huge reduction in their margins. Idea Cellular and Reli…

STOCK MARKET WELCOME NEW YEAR WITH LOSS

Sensex drops 244 pts
A late sell-off in auto, banking and IT shares pulled back the benchmark BSE Sensex from record high level to close down by 244 points, its biggest single loss in past one month, on the first trading day of 2018. Investors preferred to book profits at record highs amid concerns over fiscal slippages and rising crude oil prices and absence of cues from global markets which were closed for the New Year holiday. The benchmark Sensex touched a low of 33,766.15 before settling lower by 244.08 points, or 0.72 per cent, at 33,812.75. This is the biggest single-day fall since December 1 when the index had lost 316.41. The 30-share index had closed at an all-time high of 34,056.83 in the last session of 2017 on Friday. Also, the 50-share Nifty cracked below the 10,500-mark to hit a low of 10,423.10 before settling 95.15 points, or 0.90 per cent down at 10,435.55. Stocks opened on a weak note and remained range-bound for the better part of the day but an intense sell-off in…

NIFTY EARNINGS FLAT IN 2018

UBS Cautious Note

Projecting zero returns from the Nifty, Swiss brokerage UBS has projected a 10 per cent cut in its index target at 10,500 for calendar 2018, even as it remains positive over the long-term. "Top-down, we forecast Nifty earnings growth will recover from 9 per cent in fiscal 2018 to 13 per cent in 2019, but driven largely by financials," the brokerage said in a report. "However, earnings growth is likely to disappoint against consensus forecast of 22 per cent growth for fiscal 2019, implying a 10 per cent cut," it added. Accordingly, the brokerage estimates "no returns from the Nifty in 2018" and has set the index target at 10,500 for this December. The report noted that a sharp earnings recovery, with continued robust macro stability appears priced in by the markets. "A sharp earnings recovery appears priced in. The markets are already close to our 2018 target, given optimistic fiscal 2019 consensus earnings expectations, which build …