Indias capital

market
investment
options
A Presentation
November 30, 2006

Indian Economy and Capital

Market at a glance
Second fastest growing economies after
China with an average annual growth rate of
more than 8 per cent in the last three years

Indias growth rate has surpassed some of the

developed economies

GDP at current market prices is over US $778

billion

Indian Economy and Capital

Market at a glance
Foreign investment can be made in
India with specific prior approval in
sectors other than those prohibited

Foreign investment is now freely

allowed in all sectors, including the
services sector subject to specified sect
oral ceilings except in a few
strategically sensitive areas

Indian Economy and Capital

Market at a glance
General permission granted to the Indian
companies for issuing rights/bonus
shares to the existing nonresident
shareholders subject to adherence to
sect oral cap

Indian companies may issue shares

under Employee Stock Option Scheme to
its employees who are resident outside

Indian Economy and Capital

Market at a glance
An Indian company can raise foreign

currency resources overseas through ADRs

or GDRs

Foreign Institutional Investors are allowed

to invest in India under the Foreign
Institutional Investment scheme

Portfolio investment limits in individual

companies can be raised by Board

resolution keeping the overall sect oral cap
in view

Indian Economy and Capital

Market at a glance
Investments can be made through
foreign venture capital funds

Private equity is allowed as an

alternative form of investment

Qualified Institutional investors are

allowed to invest in Indian Depository

Receipts floated by foreign companies.
FIIs and NRIs can also invest in IDRs
after obtaining permission from RBI

Indian Economy and Capital

Market at a glance
FIIs can make investments in Corporate and
Government Bond markets within the limits

Household Investment in Shares and debentures as

percentage of financial savings at 4.9 per cent

Indian Economy and

capital market at a
glance
Market capitalization of Rs.34,62,692
crore or over US $ 770 billion as on
November 17, 2006

India is the worlds 12th largest in

market capitalization.

Market cap-GDP ratio is almost 100 per

cent

Indian Economy and

Capital Market at a
Glance
With Sensex crossing 13,000 mark
ahead of most of the emerging
economies with a P/E ratio of 22.01

NSE (Indias National Stock Exchange)

is the third largest in the world in the
number of trades after NYSE and
NASDAQ

Indian Economy and

Capital Market at a
Glance
India has 23 small and 2 big stock
exchanges

The 2 big stock exchanges (National

Stock Exchange and Bombay Stock
Exchange) account for 90 per cent of
trade

Over 7000 listed companies on the

stock exchanges largest in the world

Indian Economy and

Capital Market at a
9040 brokers in cash
segment and 1064 in
Glance
derivative segment of the market

122 investment bankers in the market

58 under writers to support primary issues
34 foreign venture capital funds
120 Portfolio managers

Indian Economy and

Capital Market at a
Glance
11 custodian banks
2 depositories with over 9 million beneficiary
owner accounts

120 Portfolio managers

Number of traders at 20 million
Number of internet trading clients at 1.44
million

Internet trading at 12 per cent of total trading

Indian Economy and

Capital Market at a
Glance
Rise in index during the last eighteen months
over 100 per cent

Year on year return during the last year at 74

per cent

Daily volatility of the market 0.76 per cent to

1.29 per cent

39 mutual funds with over 500 schemes for

investment

Indian Economy and

Capital Market at a
Glance
Cumulative assets of mutual funds over
US$68 billion

India launches Capital Protection Fund

and Gold Exchange Traded Funds

About 1000 foreign institutional

investors

Indian Economy and

Capital Market at a
Glance
Investors by foreign institutional
investors at over $50 billion

At current prices, it is around 15 per

cent of the total market capitalization

Only broad based entities established

and incorporated abroad are eligible to
be registered as Foreign Institutional
investors in India

Indian Economy and

Capital Market at a
Glance
FIIs can invest on behalf of their clients
through sub-accounts

For normal FIIs, limit for investment in

equity is at least 70 per cent while the
rest could be invested in debt up to a
maximum limit of 30 per cent

Indian Economy and

Capital Market at a
Glance
FIIs could also be dedicated debt funds who can
invest up to 100 per cent in debt

FIIs can issue overseas derivative instruments

like Participatory Notes (PNs) to the entities
registered in the country of origin.

There are 86 venture capital funds and 54

foreign venture capital investors

Most Foreign venture capital funds provide seed

capital to firms with enormous growth potential

Why invest in Indian

capital markets?
Business Week says that of 100 emerging
market firms which are rapidly globalising
21 are Indian firms

Economists project India to become the

third largest economy in the world by 2040

Indian capital market regulator has

acquired international credibility in the
least possible time

Why invest in Indian

capital markets?
India has a disclosure based regime of
regulation

Disclosure and Investor Protection

guidelines available

Indias accounting standards are closer

to international standards

India has a well laid down legal

framework

Why invest in Indian

capital markets?
India has T+2 rolling settlement as
opposed to T+3 in NYSE.

In India the transactions are totally

electronic on a real time basis.

India has several protective safeguards

for the retail investor such as grading
system of public offering, retail quota at
25 per cent etc.

Why invest in Indian

capital markets?
SEBI has made corporate governance
guidelines mandatory for listed companies

Mutual funds are permitted to invest

overseas up to $3 billion

Margin trading is in vogue

Corporatisation and demutualization of
stock exchanges on card - foreign
participation in bourses permitted.

Why invest in Indian

capital markets?
As an integral part of risk management

trading and exposure limits, var margins

and mark to market margins are in vogue

Clearing houses and corporations with

novation in place

Almost 100 per cent risk free electronic

settlement through depository system

SEBI has a surveillance and enforcement

system in place

Why invest in Indian

capital markets?
India to become a regional hub for bond
trading once a free financial zone is set
up

India to set up a world class National

Institute for Securities Markets with 7
business schools under its fold