The growing gap between financial markets and the real economy
The situation is similar in many markets around the world
The number of demat accounts has increased tremendously
SEBI Chief Ajay Tyagi
MUMBAI: Capital market regulator Sebi chairman Ajay Tyagi has said concerns have been raised over the lack of coordination between financial markets and real economies. He acknowledged the concerns raised by the RBI (Reserve Bank of India) and the Financial Stability Board. It’s going to be happening all over the world. Markets declined rapidly with the spread of the corona virus epidemic, followed by rapid growth. He said there was a V-shaped boom in the stock markets like never before in the last 30 years. Tyagi said in the NISM program that stock markets are generally considered a measure of financial status.
Stock markets behave as if the economy is moving or in the direction it is going. The RBI and the Financial Stability Board have responded to efforts to tackle the corona epidemic since its outbreak. These companies have expressed concern about the growing gap between the real economy and financial markets. They say it poses a risk to the economy. However, Tyagi said, “This kind of fluctuation is seen not only in India but also in many markets around the world.” He said these fluctuations could be detected from the spread of the epidemic and the efforts being made to control it.
In his Financial Stability Report, RBI Governor Shaktikanta Das pointed out the risks to overall financial stability and warned lenders to be vigilant. Tyagi said one of the major changes seen in the 2020-21 financial year was the direct entry of retail traders into the market. It also saw an increase in demat accounts and an increase in investments at the individual level, he said. At the same time companies have found a new way to start annual general meetings and board meetings online. He said the new practices were likely to continue even after the end of the corona virus, but that privacy and security issues at such board meetings would have to be looked into in the near future.
Most IPOs came in 2020-21
Ajay Tyagi, Chairman, Securities and Exchange Board of India (SEBI), said that the initial public offerings (IPOs) for the current financial year (202021) belong to companies that were strong during the corona period. A total of 18 IPOs were listed as of January 2021 in this financial year. He said most of the IPOs were from technology, specialty chemicals companies, healthcare, some financial sub-sector companies and companies in other sectors. Companies that are well established in the market also raise funds through IPOs. There is interest among investors in IPOs.
Of the total 18 IPOs, six companies have more than 100 times the membership. He said 14 of the 18 IPOs were listed at a price higher than the issue price. Of these 14, the value of three increased by more than 100 percent. With the exception of two IPOs listed in January this year, 16 other issues are currently trading above the price. As on January 2021, companies have raised over Rs 8.4 lakh crore through equity and bond markets in the current financial year. This is an increase of about Rs 40,000 crore over the same period last fiscal.