Indian Securities Market A Review Volume XX 2017 This publication reviews the developments in the securities market in India. Online: www.nseindia.com NATIONAL STOCK EXCHANGE OF INDIA LIMITED Indian Securities Market A Review Copyright © 2017 by National Stock Exchange of India Ltd. (NSE) Exchange Plaza, Bandra Kurla Complex Bandra (East), Mumbai 400 051 INDIA All rights reserved. No part of this publication may be produced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise without the written permission of NSE, except as stated below. Single photocopies of single chapters may be made for private study or research. Illustrations and short extracts from the text of individual chapters may be copied provided that the source is acknowledged and NSE is notified. This publication reviews the recent developments in the Indian Securities Market. The views expressed herein do not necessarily reflect those of NSE. The information and/ or content (collectively ‘Information’) provided herein is general information. While reasonable care has been exercised to ensure that the Information is adequate and reliable, no representation is made by NSE as to its accuracy or completeness and NSE, its affiliates and subsidiaries accept no liability of whatsoever nature for any direct or consequential loss, including without limitation any loss of profits, arising from reliance on this Information. Any Information provided herein is not intended to, nor does it constitute as financial, tax, legal, investment, or any other advice. The readers are expected to undertake their own diligence and are advised not to solely rely on this document. Any such reliance shall be at reader’s own risk. Readers are advised to seek expert advice before taking any decision. All examples used herein are purely for illustrative purposes. Nothing stated herein shall bind NSE, in any manner whatsoever. i Contents ISMR C O N T E N T S Part I Securities Market Developments ....................................................................................................... 1 A. Market Review ..........................................................................................................................3 1. Introduction to Securities Market in India ........................................................................... 5 Section I: Macroeconomic Developments ........................................................................... 5 1.1. Global Environment .................................................................................................... 5 1.1.1. Output Growth ...................................................................................................5 1.1.2. Inflation ..............................................................................................................7 1.1.3. Trade ..................................................................................................................8 1.2. Indian Scenario ............................................................................................................ 9 1.2.1. Economic Growth .............................................................................................. 9 1.2.2. Inflation ............................................................................................................11 1.2.3. Fiscal discipline ................................................................................................12 1.2.4. External sector ..................................................................................................13 1.2.5. Banking Sector ..................................................................................................15 1.2.6. Ease of doing business ......................................................................................18 Section II: Trends in the Securities Markets – The International Scenario .......................... 19 1.1 Market Trends .............................................................................................................19 1.1.1 Cash Market .....................................................................................................21 1.1.2 Derivatives Market ............................................................................................21 1.1.3 Other Markets ...................................................................................................23 Section III: Structure and Trends of the Indian Securities Market .........................................24 1.1 Basic Market Structure ................................................................................................24 1.2 Regulators ...................................................................................................................25 1.3 Market Trends in India ................................................................................................28 1.3.1 Primary Market in Equity ..................................................................................29 1.3.2 Primary Market in Debt ....................................................................................30 1.3.3 Mutual Fund .....................................................................................................30 1.3.4 Equity Derivative Markets .................................................................................30 2. Primary Market ................................................................................................................. 32 2.1 Introduction ............................................................................................................... 32 2.2 Primary Market Issuances (2016-17) ........................................................................... 32 2.2.1 Corporate Securities ......................................................................................... 32 2.2.2 Public and Rights Issues ................................................................................... 33 2.2.3 Sector-wise resource mobilisation .................................................................... 33 2.2.4 Resource Mobilization - Industry-wise and Size-wise Distribution ................... 34 www.nseindia.com ISMR Contents ii 2.3 Performance of Initial Public Offerings (IPOs) listed on NSE ...................................... 35 2.4 Debt Issues ............................................................................................................... 39 2.4.1 Private Placement of Debt .............................................................................. 40 2.4.2 Corporate Sector ............................................................................................. 42 3. Collective Investment Vehicles ......................................................................................... 43 3.1 Introduction ............................................................................................................... 43 3.2 Growth and performance of CIVs (2016-17) .............................................................. 43 3.2.1 Mutual Funds .................................................................................................. 43 3.2.1.1 History of MFs in India ....................................................................... 43 3.2.1.2 Resource Mobilization ........................................................................ 44 3.2.1.3 Sales, purchases and AUM of MFs ...................................................... 45 3.2.1.4 Institution-wise Resource Mobilization ............................................... 45 3.2.1.5 Resource Mobilization as per Maturity Period/Tenor ........................... 47 3.2.1.6 Resource Mobilization as per Investment Objective ............................ 47 3.2.1.7 Assets under Management .................................................................. 47 3.2.1.8 Mutual Fund Service System (MFSS) .................................................. 49 3.2.1.9 NMF II for Mutual Fund Distributors & investors ................................ 49 3.2.1.10 Unit Holding Pattern of Mutual Funds ............................................. 49 3.2.2 Exchange-Traded Funds ................................................................................. 51 4. Secondary Market ............................................................................................................. 53 4.1 Introduction .............................................................................................................. 53 4.2 Turnover and Market Capitalisation: Growth ............................................................. 53 4.3 Market Movements ................................................................................................... 55 4.4 Returns in Indian Market ........................................................................................... 56 4.5 Liquidity .................................................................................................................... 58 4.6 Takeovers ................................................................................................................. 60 5. Debt Market ..................................................................................................................... 62 5.1 Introduction .............................................................................................................. 62 5.2 Resource Mobilisation .............................................................................................