TRENDS IN THE CAPITAL MARKETS
DISINTERMEDIATION
The major fallout of the reforms is the increasing disinter mediation in the capital markets. There has been a marked shift from staid and conventional sources of funding to bold initiatives in the capital markets. The corporate sector directly accesses the market rather than rely excessively on institutional and bank borrowings.
The abolition of the control on capital issues in the year 1992 has given a big boost to this process.
The institutionalization of the market has had a positive impact on the quality of intermediation services and disclosure standards. The institutional investors have become an important source of pressure on the companies they invest in, to improve the quality of their corporate governance.
INSTITUTIONALIZATION
Another major visible trend is the institutionalization of the market. The market is being increasingly pervaded by institutional entities. The dominant players in the market are Mutual Funds, Foreign Institutional Investors, Financial Institutions, Venture Capital Funds, Private Equity Funds, Debt Funds, Portfolio Managers, etc.
The intermediaries like Brokers and Merchant Bankers are in the process of becoming corporate entities. The system of proportionate allotment and book building has strengthened this proclivity. The proposed entry of pension funds and provident funds into the market will further accelerate this process.
The institutionalization of the market has had a positive impact on the quality of intermediation services and disclosure standards. The institutional investors have become an important source of pressure on the companies they invest in, to improve the quality of their corporate governance.
GLOBALIZATION
Another notable feature is the gradual integration of the Indian capital markets with the global markets. The process started with the opening of our capital markets to foreign portfolio investment. However, only institutional investors like foreign Mutual Funds and Pension Funds are permitted to invest subject to certain conditions. These conditions in general and the ceilings for investments in particular have been progressively liberalized.
The ceilings for investment by Nonresident Indians (NRIs) and Overseas Corporate Bodies (OCBs) in Indian companies have also been increased. The Government also permitted Indian corporate to directly tap the international markets for raising capital. This measure enabled listing of Indian paper on international stock exchanges. The Government has also allowed Indian Mutual Funds to invest in foreign markets as a part of global diversification of their portfolios.
DISINTERMEDIATION
The major fallout of the reforms is the increasing disinter mediation in the capital markets. There has been a marked shift from staid and conventional sources of funding to bold initiatives in the capital markets. The corporate sector directly accesses the market rather than rely excessively on institutional and bank borrowings.
The abolition of the control on capital issues in the year 1992 has given a big boost to this process.
The institutionalization of the market has had a positive impact on the quality of intermediation services and disclosure standards. The institutional investors have become an important source of pressure on the companies they invest in, to improve the quality of their corporate governance.
INSTITUTIONALIZATION
Another major visible trend is the institutionalization of the market. The market is being increasingly pervaded by institutional entities. The dominant players in the market are Mutual Funds, Foreign Institutional Investors, Financial Institutions, Venture Capital Funds, Private Equity Funds, Debt Funds, Portfolio Managers, etc.
The intermediaries like Brokers and Merchant Bankers are in the process of becoming corporate entities. The system of proportionate allotment and book building has strengthened this proclivity. The proposed entry of pension funds and provident funds into the market will further accelerate this process.
The institutionalization of the market has had a positive impact on the quality of intermediation services and disclosure standards. The institutional investors have become an important source of pressure on the companies they invest in, to improve the quality of their corporate governance.
GLOBALIZATION
Another notable feature is the gradual integration of the Indian capital markets with the global markets. The process started with the opening of our capital markets to foreign portfolio investment. However, only institutional investors like foreign Mutual Funds and Pension Funds are permitted to invest subject to certain conditions. These conditions in general and the ceilings for investments in particular have been progressively liberalized.
The ceilings for investment by Nonresident Indians (NRIs) and Overseas Corporate Bodies (OCBs) in Indian companies have also been increased. The Government also permitted Indian corporate to directly tap the international markets for raising capital. This measure enabled listing of Indian paper on international stock exchanges. The Government has also allowed Indian Mutual Funds to invest in foreign markets as a part of global diversification of their portfolios.