Equity markets have impressed but IPOs increasingly turning into exit vehicles: CEA

Chief Economic Adviser V Anantha Nageswaran

Chief economic advisor V Anantha Nageswaran on November 17 said there is a need to guard against celebrating the wrong milestones, such as market capitalisation ratios or the volumes of derivatives traded. "We must guard against celebrating the wrong milestones, such as market capitalisation ratios or the volumes of derivatives traded," Nageswaran said, while addressing CII Financing Summit in Mumbai.

The economist added that these are not measures of financial sophistication and they only risk diverting domestic savings away from productive investment.

Further, he said that India's equity markets have grown impressively, but initial public offerings have increasingly become exit vehicles for early investors rather than mechanisms for raising long-term capital. "This undermines the spirit of public markets. India cannot rely predominantly on bank credit for long-horizon financing," he said.

On November 6, Union finance minister Nirmala Sitharaman said the government is "not here to shut the door on futures and options trading".

"Government is here to remove the roadblocks and work on them," Sitharaman said at the 12th SBI Banking and Economics Conclave 2025 in Mumbai. On the bond market front, he added that a deep and reliable bond market is a strategic necessity, particularly for financing long-term national objectives.

Further, insurance and pension funds, whose horizons naturally align with long- term investments, must play a larger role, he added.

However, the edifice of the bond market will be built on the foundations of trust and transparency, to which corporate leadership must commit on a durable and demonstrable basis, he added.