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On
ROLE OF DOMESTIC INSTITUTIONAL INVESTORS ON INDIAN
CAPITAL MARKET.
By
SARTHAK BEHAL
A3110114008
Introduction
Indian industrial home institutional investors (DII) refer to Indian mutual fund
companies, life insurers and banks. Traditionally, the Indian stock market relied on cash
flow from a sustainable rally from abroad. These participants are foreign financial
institutions traded in the Indian stock market. FII has been leading the Indian stock
market, and its rise and fall are directly related to their investment in India.
India has been one of the favorite investment destinations for foreign institutional
investors, but the Western recession includes much of Europe and the United States, and
India's investment decisions are better. The stock market in the United States and other
Western economies did not produce any returns at this stage, and the Indian economy
was more stable. As a result, FII's fund flooded the Indian stock market.
In 2009 and 2010, the Indian stock market rose exponentially after a sharp drop in 2008.
India's stock market outperformed most of its peers. It helped local Indian investors get
a huge return on their investment, but at the same time it increased the reliability of the
Indian stock market's appreciation of FII.
Now local and global geopolitical scenarios are less favorable in the short term, even if
India's growth story remains unchanged for a long time. The western economic situation
is gradually restored, showing a positive development trend. Which led to the
withdrawal of FII funds from the Indian market.
India's stock market has been struggling in recent months, every time there is positive
news about Western economic development, the Indian stock market fell. At the same
time, India has a very positive development, almost ignored, which is the rise of DII.
DII has always existed; nothing like they never existed. It's just that they have been net
buyers in the last few months. Now with the stability of the market, discussions about
their role in the stability of the Indian stock market are accelerating.
In the past two quarters of net sellers, they were FY's fourth quarter net buyers of
Rs1,076 billion rupees. India's stock market has been hit hard, its valuation at a
reasonable level. At the same time, investors invest in life insurance, equity-linked
savings schemes and other tax breaks. These two factors combine to lead them to large
investments in the Indian stock market.
Institutional investors are often thought to undermine the stability of the stock market
because
Usually their deal can be moved on a large scale away from the basic value. in
In this respect, it is graded by the agency and is often seen as destabilizing the market.
There are several reasons why an organization may have more than an individual.
Organizations may try to measure the quality of investment in each other's transactions,
This leads to grazing. And because the agency learn more about each other's transactions
More than individuals, they tend to be more.
However, the flock itself does not necessarily mean institutional investors
Destabilize the stock price. If they are in groups, because they all react to the same
fundamental
Information in a timely manner, they actually contribute to market efficiency
Speed up the price adjustment to the new fundamentals.
Positive feedback can be unstable if the positive feedback transaction causes the
institution to buy overpriced stocks and sell low-priced stocks, leading to further
differentiation of the price away from the fundamentals.
From the point of view of the fund manager, add the winner to the portfolio strategy
And eliminate the range of losers to provide a combination of window dresses.
Opponents
Buy a cheap high dividend rate or a high market value investment strategy
Stock often takes a long time to repay, and in fact may be very bad in the short term
run.
3.2 Methods
executive Summary
India's insurance industry has gone a long way past for the past 15 years, from the basic
role of providing basic protection against loss. It has become an indispensable pillar in
support of India's economic prosperity and growth by explaining risks, providing funds
for state-building projects, stabilizing the stock market and promoting social security. In
the process, it continues to create significant value for all stakeholders, that is,
customers, distributors, shareholders and insurers. India's insurance industry's growth
story, because liberalization has been dramatic. The life and non-living sectors initially
witnessed the long-term stages of sustained and substantial growth. However, the
charges for the life insurance sector are blocked by the much-needed course revisions
initiated by regulators in recent years, leading to stagnation of growth and a question
mark on the viability of existing business models. On the other hand, the increase in the
number of non-life insurance is more stable, but due to excessive claims related losses,
the journey is impaired. In both cases, many of the pain is released by the necessary but
too frequent regulatory intervention, thus hampering the stability of the industry. As
with the Indian market, the global insurance program is still boring, low interest rates
(impact profit margins), non-living sector soft pricing conditions and frequent regulatory
reforms. However, one of the main facts that distinguishes developed markets from the
Indian market is India's unparalleled growth potential, which in turn has lower insurance
penetration in India (3.3% in total - 2.6% in life, 0.7% in nonprofits), income levels
Rising economic growth rates and very favorable population attributes. To ensure that
the future is characterized by a comprehensive industry growth and maximizing the
value created for all stakeholders, the industry must strive to take advantage of every
opportunity. Some of the areas that must be taken in this regard include:
Make full use of the Insurance Act (Amendment) Act 2015 to effectively use
incremental capital injections to raise awareness, expand under-infiltrated sectors and
adopt global best practices in operational efficiency and service delivery
The following are the same as the "
Explore the possibilities of the pension sector by developing related products and
stimulating stakeholders.
The following are the same as the "
Further penetrate the health insurance department, by attracting customers at an early
date, creating cost-effective products (products with savings components, old age health
insurance) and keeping fraud.
Addressing cost challenges by making more use of technology to streamline
operations, curb claims losses and prevent fraud.
Take full advantage of the digital population, undermine traditional business structures,
and manage risk through the use of flexible network security frameworks.
It creates value for policy holders who trust insurance products, shareholders who
support business, relier-based distributors, and insurers that are linked to all other
stakeholders. It is this interrelated, if done in a balanced manner while maintaining low
cost, creating a long-term success story.
For customer / policy holders: sell demand-based insurance plans; fair claims during
claims, due or surrender.
For the dealer: reasonable compensation for the time and effort involved in obtaining
the customer.
For insurers: create a vibrant business with a strong working culture, win customers of
their choice, and attract suitable investors who believe in long-term, best-in-class,
ethically motivated business.
Any modern era of economic development can not be achieved If its insurance
department is still underdeveloped. The insurance industry plays a vital role in
mitigating risks, supporting key social levers, providing long-term capital for
infrastructure development, and bringing importance to the stock market.
Risk Management
Insurance support institutions remain unpredictable losses, which could endanger the
presence of the organization. By limiting damages, insurance brings income consistency.
It gives investors confidence that they will not be in the normal areas of business risk.
Infrastructure development
The following are the same as the "
As the Indian market has limited tools to support long-term asset-liability management,
the insurance industry has succeeded in bringing savings to national construction
through infrastructure development. Life insurance companies' investment in
infrastructure (18-20 years compound annual growth rate of 18%) is growing faster than
India's GDP growth rate, which illustrates the industry's key. Life insurance companies
manage nearly 1/8 of assets (fiscal year 2015: 12.4%) 2 are currently leveraging
infrastructure projects.
The insurance company is one of India's largest fund managers, helping to check the
unfavorable fluctuations in the stock market, because they are often relatively large in
the market during the adjustment period.
Create employment
The insurance department is a major employment provider in India because it has about
35 million people's payroll (life and general), indirectly employing at least 2 million
people (life insurance agents alone more than 2 million, and thousands of channels
Partners and other relevant departments). Social security and financial inclusiveness
insurance allow low-income social sectors to address the risks that directly affect their
livelihoods. Most of this part of the insurance policy is provided with the government,
or through the "rural or social sector obligations" to sell the policy provided. Since
liberalization in 2000, India's insurance industry has grown year by year, mainly to
promote economic growth. However, its added meaning also means that in recent years,
the downturn in the industry to see growth may become India's future economic growth
drag. Therefore, it is essential to re-encourage this growth engine to take corrective
action at multiple levels by strengthening regulatory intervention, industry collective
efforts and corrective action by each insurance company. C. Growing stories -
liberalization, expansion and introspection Although the insurance industry has been
fast-paced in the past 15 years, it is not perfect. In 2000, after the private participation
and foreign funds were opened, insurance companies increased their distribution and
operation in order to win market share. The rapid growth of the economy, the rise in the
middle class population and the rise in wealth and stock markets have resulted in an
average growth rate of the first-year premium between FY02 and FY11 in the life
insurance industry, with a total direct premium growth rate of between non-life sectors
between FY02 and FY11 For 16% and FY153. However, as construction scale takes
precedence over creating high quality business, regulators enter the inspection at each
business level. This allows insurance companies to reflect the viability of their operating
models in new product areas. Insurers are forced to take a variety of corrective actions
because efficiency and profitability are critical to long-term value creation. As a result of
these measures, the customer with its correct status as a central figure, and focus on
winning customer trust. Life insurance industry growth in the past few years life
insurance company's first year premiums from fiscal year 2006 26.2 billion rupees to
fiscal year 2011 12.64 billion rupees to 30% compound annual growth rate of growth,
because people on life insurance, Favorable demographics, favorable stock markets,
rapid distribution expansion (especially in individual agent channels), and the
introduction of innovative products.
However, the 2010 revised ULIP guidelines (which significantly limit the profitability
and distribution of distributors), the multiple restrictions on corporate agents and
brokers, coupled with sustained high inflation and low growth scenarios, led to the
stagnation of new business premiums Fiscal year 2011. As a result, new business
premiums fell from Rs. 126.2 crore in 2015 to Rmb13.11 crore (4-year compound
growth rate: -3%). However, in the short term, the life insurance sector is expected to
grow by about 6% (until 2018).
The pattern of competition in the high growth phase of 05-11 fiscal year, the proportion
of the private sector (currently 23) rose to 39% of the first year of fiscal 2009 5%, while
the public sector huge Indian life insurance company) fell to 61 %.
With unit-linked products (ULIPs) losing favor among both distributors and customers
post FY11, and private players forced to reorganize their operations to better manage
costs, the private players market share shrunk to 25% in FY14, with LIC regaining
some of its lost turf. However, FY15 witnessed a strong performance by bancassurance-
dominated insurers, owing to the increased take-up of insurance in a rapidly expanding
private bank branch network (the top 3 private banks increased their combined branch
count from around 4,700 in March 2010 to 10,653 in March 2015), revival of ULIPs
following a rebound in equity markets, and greater use of technology. This, coupled with
a relatively weak performance by LIC in recent quarters, again led to a drop in LICs
market share in FY15 (69% vs. 75% in FY14). The top four private players are all
bancassurance-led and now command 54% of the private market share and 17% of the
total market share.
After the 2011 fiscal year, Unit Link Products (ULIP) have lost their favor
among distributors and customers, and private participants have been
forced to reorganize their business to better manage their costs. In 2014,
the private sector's market share fell to 25% LIC regained some of the lost
turf. However, as the insurance industry increased in the rapidly expanding
private bank branch network (the top three private banks increased the
number of merged branches from about 4,700 in March 2010 to 10,653 in
March 2010), bank insurance led The performance of the insurance company
is strong. March 2015), the recovery of ULIP after the stock market rebound,
and the increased use of technology. This coupled with the relatively weak
performance of LIC in recent quarters, once again led to a decline in LIC's
market share in fiscal year 2015 (69%, 75% in fiscal year 2014). The top four
private banks are bancassurance channels and now account for 54% of the
private market share, accounting for 17% of the total market share.