According to analysts, this influx is lowering bond yields, reducing borrowing costs, and positioning Indian debt as increasingly attractive for foreign investors…reports Asian Lite News
As Indian stock markets continue to show robust growth despite global uncertainties, a record 15 companies registered their initial public offering (IPO) documents with the Securities and Exchange Board of India (SEBI) on the last day of September.
This took the total filings for the month to 41 which is the highest-ever IPO document filing in a single month.
According to market watchers, the surge in draft red herring prospectus (DRHP) filings happened as audited financials for the quarter ending March 31 are valid only until September 30.
“We forecast more than Rs 1.5 lakh crore of fund raise via IPOs this year. Increasing number of growth-stage businesses will hit the street. Moreover, we will have trend of multinationals coming to tap Indian capital market,” said Mahavir Lunawat, Managing Director, Pantomath Capital Advisors.
“Besides, several other market liquidity parameters, notably monthly mutual fund flow has doubled since last quarter and we are getting close to Rs 40,000 crore of money every month. This has fuelled capital market buoyancy phenomenally,” he added.
The Indian equity markets have reached all-time closing highs, reflecting investor confidence driven by anticipated changes in the domestic interest rate cycle following the US Federal Reserve’s recent 50-basis-point rate cut.
The overall trend in the Indian equity market remains positive, said experts.
Additionally, the inclusion of Indian sovereign bonds in JP Morgan’s global debt indices has attracted around $18 billion in foreign investment over the past year, with expectations for continued growth following recent US interest rate cuts.
According to analysts, this influx is lowering bond yields, reducing borrowing costs, and positioning Indian debt as increasingly attractive for foreign investors. Future monthly inflows could reach $2 to $3 billion, significantly boosting foreign participation in India’s bond market.
As per Angel One Wealth data, in the first half of this year, more than 5,450 companies have been listed across the world, in which India’s share was about 25 per cent.
Last year also a large number of IPO listings were seen in India. The reason for this was the high inflow by domestic investors in emerging companies and sectors.
SEBI Tightens Rules
The Securities and Exchange Board of India (SEBI) has announced several new measures to curb speculative trading in the futures and option (F&O) segment as nine out of ten participants have consistently lost money over the past three years.
Under the F&O measures, market regular has increased the minimum contract size in the index derivatives to Rs 15 lakh from the current Rs 5 lakh.
SEBI has also reduced the weekly index expiry count to one per exchange. This means that exchanges can only offer one expiry in a week on one benchmark index.
“In order to specifically address this issue of excessive trading in index derivatives on expiry day, it has been decided to rationalise index derivatives products offered by exchanges which expire on a weekly basis. Henceforth, each exchange may provide derivatives contracts for only one of its benchmark index with weekly expiry,” SEBI said in a circular.
The market regulator has taken this step due to heavy losses incurred by retail investors in the F&O segment.
As per the recent study released by SEBI, in the last three years, a combined loss of Rs 1.81 lakh crore has been incurred by 1.10 crore traders. Out of these, only 7 per cent of traders have been successful in making a profit.
After the new SEBI circular, the size of derivatives contracts in benchmark indices like Nifty and Sensex will increase from Rs 5 lakh-Rs 10 lakh to Rs 15 lakh-Rs 20 lakh.
This measure would be effective for all new index derivatives contracts introduced after November 20, 2024.
The derivatives market in India has significantly increased in the last few years. In July, SEBI’s paper said that India’s derivatives market has surpassed the cash market. At present, India accounts for 30 to 50 per cent of the total global derivatives trading.
According to the data, cash market turnover in India has doubled from FY 20 to FY 24, while the turnover of index options has increased 12 times to Rs 138 lakh crore in FY 24, which was Rs 11 lakh crore in FY 20.
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