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INDIAN CAPITAL MARKET SOARS HIGH IN 2007
: MARKET CAPITALIZATION DOUBLES OVER PREVIOUS YEAR
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The Indian Capital Market attained further depth and width during 2007, says the Economic Survey 2007-08. BSE sensex scaled a high of 20,000 mark at the close of calendar year 2007 and NSE Index rose to close about 6100 mark. Both the indices more than tripled between 2003-07. The total amount of the capital raised through different instruments in the Primary Market was 31.5 per cent higher in 2007 compared to 2006. Component wise, private placement at Rs. 1,11,838 crore (upto November 2007) accounted for the major share during 2007. The total equity issues mobilized Rs. 58, 722 crore, of which Rs.33,912 crore was accounted for by the Initial Public offerings (IPOs). During 2007, the total number of IPOs issued was 100 as compared to 75 in the previous year. Similarly, the net flow of savings into mutual funds increased by over 30 per cent in 2007 to Rs.138,270 crore. Of this 1,20,766 crore was in Private Sector, 8,259 in the public sector and Rs.9245 crore in UTI funds.
In the secondary market, the activity expanded further during 2007-08 with BSE and NSE indices scaling new peaks. On a point to point basis, sensex and Nifty indices rose by 47.1 and 54.8 per cent respectively during 2007. Amongst NSE indices, both Nifty and Nifty Junior delivered record annual equity returns of 54.8 per cent and 75.7 per cent respectively during the calendar year. BSE Sensex yielded a compounded return of 36.5 per cent between 2003 and 2007. Sensex has given an annual return of over 40 per cent during the last three years.
The market capitalization in India nearly doubled in 2007. The BSE 500 capitalized to Rs. 64,70,881 crore, BSE Sensex capitalized to Rs.28,61,341, Nifty to Rs. 35,22,527 crore and Nifty Junior to Rs.6,43,623 crore from Rs. 33,36,509 crore, Rs.17,58,65 crore, Rs.19,75,603 crore and Rs.3,33,693 crore respectively in 2006. The price to earnings (P/E) ratio was higher at around 27 by end December, 2007 as compared to 21 in the previous year.
The valuation of Indian stocks as reflected in P/E multiples of around 27 times end December 2007 was the highest amongst the select emerging market economies such as South Korea (15.04), Thailand (19.92), Malaysia (16.07), Indonesia (18.43) and Taiwan (20.14). In India, Market capitalization (BSE 500) at US$ 1,638 billion was 150 per cent of GDP, which compares well with the other economies such as China (137.3) Japan (104.4), South Koria (116.2) and USA (128.8). In the derivative market the NSE and BSE turnover added upto Rs.1,21,60,701 crore during 2007 showing a quantum growth over the previous years.
As per the Economic Survey, Policy and Regulatory changes for the capital markets introduced during the year include, amendments to Disclosure and Investor Protection Guidelines; appointment of a sub- committee on Disclosures and Accounting for integrating initial and continuous disclosures of companies; stipulation that Permanent Account No. would be the sole identification number for all participants in the security markets; successful completion of demutualization process by 16 stock exchanges; SEBI permitting short selling by Institutional investors and waiver of entry load by mutual funds for investors making applications for investment in mutual fund schemes directly.
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