EXCEL BUSINESS ACADEMY

Presentation On:Developments in Indian capital market

Presented By:Geetha.p Mehul Patel Javed Alam Paresh Vavadiya Jayesh Patel Hardik Modi Dipankar Nath

Definition
Capital Market Efficiency may be defined as the ability of securities to reflect and incorporate all relevant information in their prices. Three forms of capital market efficiency may be distinguished
1. Weak form of efficiency 2. Semi-strong form of efficiency 3. Strong form of efficiency

Capital markets Key Developments

Simplified debt list agreement for debt securities SEBI has permitted stock exchanges to set the trading hours (in cash

and derivative segments) between 9 am to 5 pm subject to specified

conditions

Portfolio managers to segregate client funds and securities visa vis own
funds and securities Allocation methodology for debt investment limit prescribed for FIIs FIIs allowed to trade in interest rate futures within permissible limits FIIs allowed to invest in IDRs as per guidelines prescribed by RBI

Financial Services Key Developments

Government planning to ease restriction on foreign investment in
insurance and banking i.e. allow FDI upto 49% from the present 26%

- Bill to give effect for increase in FDI in insurance is pending before

the Rajya Sabha LLP Act and Rules notified in 2009 - Clarity of FDI in LLP awaited Companies Bill 2008 proposed to be put up before Parliament in the

upcoming monsoon session

Mutual funds Key Developments

AMFI has issued guidelines permitting change of mutual fund

distributor Mutual funds are permitted to invest in IDRs subject to prescribed SEBI guidelines Abolition of entry load on all mutual fund schemes w.e.f August 1, 2009 Permission granted to allow trading of mutual fund units through registered stock brokers of recognised stock exchanges No distinction among unit holders on amount of subscription while charging entry loads New innovative products launched to explore untapped customers i.e. gold traded funds, capital protection oriented schemes and SIP having monthly investment as low as Rs 100

MACRO PICTURE - CURRENT

The Indian stock market has also grown in size and activity.and this has led to a spate of such companies coming into the capital market. As of March 2006, there are more than 10000 listed companies in India which has the prominent Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) Total market capitalization - INR 32166 Bn. (estimate as of 31 March 2006) 49.81% of equity in 200 companies constituting the Bombay Stock Exchange (BSE) 200 Index was held by promoters in operational control Of the 30 companies on the Sensex, 23 fall in the dominant shareholder managed category; with shareholdings ranging from 22% to 90%.

New Capital Issues by Non-Government Public Limited Companies

Date of Publish : Mar 10, 2010

Capital Market

Security & Type of Issue

2007-08 (April-March) No. of Amount Issues 1 2 111 (103) 85 (83) 26 (20) 1 1 2 2 1 3 56,848.3 (54,732.4) 47,477.5 (46,138.8) 9,370.8 (8,593.6) 5,480.8 5,480.8 808.8 808.8 205.9

2008-09 (April-March) No. of Amount Issues 4 45 (39) 25 (24) 20 (15) 45 25 20 5 14,670.6 (13,022.0) 2,673.3 (1,966.5) 11,997.3 (11,055.5) 14,670.6 2,673.3 11,997.3

April-December 2008 No. of Amount Issues 6 40 (34) 20 (19) 20 (15) 40 20 20 7 14,006.9 (12,826.9) 2,009.6 (1,771.5) 11,997.3 (11,055.4) 14,006.9 2,009.6 11,997.3

(Amount in Rs. crore) April-December 2009 No. of Amount Issues 8 36 (35) 18 (18) 18 (17) 1 1 1 9 13,121.4 (11,574.3) 10,169.3 (9,026.4) 2,952.1 (2,547.9) 180.0 180.0 180.0

1) Equity Shares (a+b) a) Prospectus b) Rights 2) Preference Shares (a+b) a) Prospectus b) Rights 3) Debentures (a+b) a) Prospectus b) Rights of which: I) Convertible (a+b) a) Prospectus b) Rights II) Non-Convertible (a+b) a) Prospectus b) Rights 4) Bonds (a+b) a) Prospectus b) Rights

5) TOTAL (1+2+3+4) a) Prospectus b) Rights

1 1 1 1 1 115 86 29

205.9 602.9 602.9 500.0 500.0 63,637.9 47,977.5 15,660.4

1 37 18 19

180.0 13,301.4 10,169.3 3,132.1

Recent development
The recent decision of the Reserve Bank of India (RBI) to allow foreign investment up to 49 percent in stock exchanges, depositories and clearing corporations is hailed as a good development for the securities industry.

Deutsche Boerse, Europe's top stock exchange and transaction service provider has signed an agreement to buy 5 %equity in the Bombay Stock Exchange (BSE) for $43 million

Cont
Singapore Stock Exchange (SGX) says its short listed for BSE stake. It claimed that it has been short listed to buy a 5 percent stake in the bourse. US major, NYSE, bought 5 per cent in the National Stock Exchange for $115 million. This values NSE at $2.3 billion.

Cont..
NASDAQ Stock Market Inc., London Stock Exchange Group PLC and NYSE Group Inc. have also been touted as bidders for a stake in BSE. Be Foreign stock exchanges are now eyeing equity stake in the Over the Counter Exchange of India (OTCEI). Recently, officials from the China Shanghai Stock Exchange visited the OTCEI and it is learnt that the Chinese may willing to buy 5 per cent in the exchange as permitted under current guidelines.

Cont
Sources say that London's AIM and the South Korean stock exchange may be willing to buy stakes in the OTCEI exchange . According to sources, the Inter-connected Stock Exchange of India (ISE), an exchange floated by a group of small exchanges, is attracting global peers like the London Stock Exchange (LSE), Singapore Stock Exchange (SGX) and some top private equities players.

Cont..
Few weeks back Goldman Sachs acquired five per cent in the National Stock Exchange.

Goldman Sachs has proposed to buy a stake in the Multi Commodity Exchange (MCX), India's largest commodity bourse. London Metal Exchange and The Tokyo Commodity Exchange have also initiated talks with MCX

Negotiated Dealing System Electronic Order Matching (NDS-OM) Launched

On August 1, 2005, RBI launched . Firstly, banks and primary dealers were allowed to trade on the system. January 2006, system was extended to all insurance. Union Budget 2006-07 announced the extension of the NDS-OM module to mutual funds (MFs), provident funds and pension funds.

Mumbai as a Centre for International Finance

In his Budget speech the Finance Minister has made the announcement in para 90 regarding appointment of a high powered Expert Committee to advise the Government on how to make Mumbai a regional financial center. This Committee has been constituted in November 2005 under the Chairmanship of Shri. Percy S. Mistry, Chairman, Oxford International Group.

Anti-Money Laundering Guidelines

SEBI has put in place Anti-Money Laundering Guidelines in January, 2006 This is implemented to discourage and identify any money laundering or terrorist financing activities. These guidelines are meant for use primarily by intermediaries registered with SEBI under the SEBI Act, 1992. (The Guidelines have taken into account the requirements of the Prevention of the Money Laundering Act, 2002 as applicable to the SEBI registered )

Introduction of Gold Exchange Traded Fund schemes by Mutual Fund

SEBI has, vide notification dated 12th January, 2006, allowed MFs to float Gold Exchange Traded Fund schemes which have been are permitted to invest primarily in Gold and Gold related instruments, which have been defined as such instruments having gold as underlying, as are specified by SEBI from time to time