India@70: There is quiet revolution in equity markets but golden period is yet to come

The Bombay Stock Exchange (BSE) building is illuminated during a special "muhurat" trading session for Diwali, the festival of lights, in Mumbai, India, November 11, 2015. Stock markets opened on Wednesday for a special one-hour Diwali holiday session. REUTERS/Shailesh Andrade

Jayant Manglik

There has been a lot of noise about equity markets recently but all of it has been centered around the markets crossing new milestones like 30,000 on Sensex and 10,000 on the Nifty50.

This, of course, is the outcome of the economic performance of the country and the market cap of the listed entities is the proof of the pudding, now that it has crossed $2 trillion.

Importantly, it is also a time when the markets themselves are more active. For example, the improving market-cap to GDP ratio indicates more confidence leading to increased trading and investing activity.

It also means that there are more participants in the India story who are funding the growth and will partake of the considerable benefits over the next several years.

And yet there’s even more happening — quietly.

The regulator has been very active in aiming to modernise the securities markets. With remarkable foresight and alacrity, it has formed a special panel on fin-tech, with heavy-duty committee members, to study, deliberate and suggest ways to widen and deepen markets with extensive use of technology.

The aim is to lower transaction cost and improving ease of doing business. There is action on other fronts too.

For example, the commodities segment has seen much more focus recently. The regulator allowed the same broking entity to do equity and commodity trading which will ultimately allow for cross-margining and the introduction of indices and options very soon.

It has also encouraged the introduction of new participants and allowed Alternative Investment Funds in the segment.

Further, investor protection focus has been consistently strong. The introduction of the investment products could well be the next step so that all participants have maximum financial products at their disposal in line with international markets.

Some simple products, like SIP automation, will be very well suited to Indian markets. If technology can enable all financial products to be bought and sold through the screen via the same intermediary using a single KYC, we are looking at a huge market.

Expect market development on a grand scale over the next few years. Combined with 7-8 percent annual GDP growth, investors can look forward to a golden period ahead.

Disclaimer: The author is President, Religare Securities. The views and investment tips expressed by investment experts on moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.