Mumbai, Dec 7 : The performance of Indian capital market compares favourably with the other major global markets on parameters such as indices’ returns, volatility and currency movements despite challenging domestic and global environment, said Ajay Tyagi, Chairman, Securities and Exchange Board of India (SEBI), while inaugurating the 9th Financial Markets Summit organised by the Confederation of Indian Industry (CII).
Globally, capital markets have been quite volatile during the current year and are likely to remain so in coming times on account of various factors, Mr Tyagi added.
Buttressing his point, Mr Tyagi said, “During April to November 2018, return of NIFTY has moved up by about 6.5 per cent; though trailing the return of Dow Jones (8 per cent), it is higher than the return of stock indices of other countries such as UK (- 1 per cent), China (-18 per cent), Brazil (5.7 per cent) and Japan (4.5 per cent).”
In terms of volatility, Indian equity market, at 12 per cent, is amongst the lowest compared to major developed and emerging markets like UK (12 per cent), US (16 per cent), China (19 per cent), Japan (17 per cent), South Korea (14 per cent), Hong Kong (19 per cent) and Brazil (21 per cent), Mr Tyagi added.
Indian rupee saw a depreciation of around 7% against the US Dollar, which is around the same level as the depreciation in the Japanese Yen (- 7.3 per cent) but better than many other jurisdictions like China (- 10.81 per cent), UK (- 10.10 per cent), Europe (-8.73 per cent) and Brazil (- 16.85 per cent).
The factors that affected the global markets include uncertainty in oil prices; move towards normalization of monetary policies by central banks across jurisdictions, especially policy stance of US Fed; US-China trade dispute; and geo political risks. “These factors have also affected the Indian markets,” the SEBI Chairman said.
As for domestic issues, NBFCs and HFCs have been facing tight liquidity since September 2018; “though much has improved on account of various steps taken by RBI in providing systemic liquidity. Of course, the biggest bonanza for the Indian economy has been fall of about 30% in crude oil prices in the last one month. The macros of the economy have much improved since then,” Mr Tyagi added.
Stating that alternative funding sources are gaining prominence in the economy, Mr Tyagi said that their growth, particularly that of real estate investment trusts, were affected by ‘repeated’ changes in regulations and tax formats, and that they will be in a position to perform better, going ahead.
Uday Kotak, President Designate, CII, said that the financial sector was at the cusp of transformation from Saver-Borrower Model to Investor-Issuer Model and that the regulatory environment has to take the rising risks under the new model into consideration.
“India is at the crossroads between bank-led model and intermediation-led model under investor-issuer mechanism, under which leverage is becoming infinite, rising risk levels to 24X7,” Mr Kotak added while suggesting that integration of both these models in the market was imminent.
He further emphasized that there is urgent need to bridge the gap between perception in mind of depositer and the regulators about savings and the reality on ground.
Leo Puri, Chairman, CII National Committee on Financial Markets, stressed the need for integration of various markets with a view to derive the long term benefit of low intermediation cost.
Fiduciary responsibility is critical at a time when the market is transforming to the Investor-Issuer model, said Mr Vishal Kampani, Co-chairman, CII National Committee on Financial Markets. (UNI)