Head winds could likely come from the emerging macroeconomic scenario, which, in turn, would depend upon the extent of control over the spread of the COVID-19 virus, SEBI chairman Ajay Tyagi said on Thursday.
Stressing that the prevalent high price-to-earnings (P/E) ratios had bet on earnings to improve in the future, he said a crucial factor would be how excess liquidity in the system would be managed by central banks globally, including the timing and pace of unwinding.
“The level of inflation is another factor to watch. Given the uncertainty, it is difficult to predict the inflection point,” he said while addressing a CII summit on Financial Markets.
Highlighting that the capital markets had done ‘rather well’ during the pandemic and helped both investors and the corporates, he said it was important for investors to be aware of the risks involved while making investments.
“The corporates, on their part, need to maintain high standards of corporate governance. The markets, especially the bond market, need to grow much more to meet the funding requirements of the economy,” he said.
Mr. Tyagi said post the onset of Pandemic, individual investors’ participation in India’s stock markets had increased manifold.
In FY20, on an average, 4 lakh new demat accounts were opened every month. This tripled to 12 lakh per month in FY21 and had further risen to about 26 lakh per month in the current financial year.
“Individuals’ average share in daily cash market turnover was 39% in 2019- 20. It increased to around 45% in 2020-21 and 2021-22,” he said.
Holdings of individuals in listed companies has increased from 8.3% at the end of Q1 FY20 to 9.3% at the end of Q1 FY22, he added.
“ If we see the SIP figures, while around 51-53 lakh SIPs were added during the last two financial years, around 59 lakh have been added during the first five months of this financial year itself,” the SEBI chief pointed out.
He said India still had a long way to go to deepen domestic individual investors’ participation in capital markets.
Highlighting the growth in the turnover of capital markets, he said the average monthly equity cash market turnover increased from ₹8 lakh crore in FY20 to ₹13.7 lakh crore in FY21, and to more than ₹15 lakh crore this fiscal till August.
On the equity derivatives side, the corresponding turnover figures were ₹287 lakh crore, ₹565 lakh crore and about ₹1,084 lakh crore in this FY till August, respectively he added.
“Overall, an increase of more than 90% in equity cash market turnover and more than 270% in the equity derivatives turnover in the last one-and-a-half years has increased market depth significantly,” he said.
He said funds raised via IPOs more than doubled in FY21 to about ₹46,000 crore from around Rs 21,000 crore in the previous financial year. “During current financial year, in just five months till August, the amount raised is already close to that raised during the entire previous financial year,” he said.
“Based on the applications filed with SEBI, the equity raising through IPOs this year is likely to surpass the highest amount ever raised in any financial year during the last decade” he said.
During the last 18 months, growth-oriented technology companies have raised about ₹15,000 crore through IPOs, Mr. Tyagi said adding their filings with SEBI at present show a pipeline of around ₹30,000 crore.
He pointed out that InvITs and REITs had become very popular in the last few years for fund raising and monetisation of infrastructure and real estate assets.
As on August 31, there were 15 InvITs and 4 REITs registered with SEBI. He said the cumulative value of assets under them has increased from about ₹1 lakh crore as on March 31, 2020 to ₹3.4 lakh crore as on March 31, 2021, and further to ₹3.52 lakh crore as on August 31.
He also said the more than 700 SEBI registered Alternative Investment Funds (AIFs) have seen their cumulative investments increasing 33% in a year’s time to about ₹2 lakh crore.
“With the potential to attract a lot of capital, AIFs can be a suitable vehicle to channel funds from sophisticated investors, individual and institutional, to purchase distressed loans from banks and NBFCs,” he said.
“This would unlock the capital of banks and NBFCs and make it available for fresh lending. A new sub-category of AIFs could be carved out for this purpose,” he added.
