Indian stock markets lack depth, over-dependent on FIIs: Study
14 Dec 2013 11:48 PM GMT
The Indian stock markets lack depth and are excessively dependent on foreign institutional investors (FIIs) while retail investor participation is poor, according to an Assocham study.
'The result of lack of depth in the markets is that they have become bourses for the global hot money investors who
are driven by a set of issues, especially the tapering timings of the US Federal Reserve,'
the study observed.
While the benchmark Sensex is trading well above the 20,000 mark for some time, it does not really reflect the real state of affairs, the study observed. 'Once prices fall sharply after the retail investor has bought in, he tends to wait for years since the feeling of suffering losses in one counter and making it up in another does not sink in,' Assocham secretary general D S Rawat said. Besides, retail investor confidence in the equity market does not see chances of restoration anytime in the near future, the study said. 'The retail investors' lack of confidence in the stock market is damaging the rupee as well since it has become dependent on the inflows and outflows of hot money,' it added. FIIs were gross buyers of shares worth Rs 7,46,334 crore and sellers of equities worth Rs 6,45,757 crore till 6 December. This translates into a net inflow of Rs 1,00,577 crore ($18 billion), according to Sebi data.
'The result of lack of depth in the markets is that they have become bourses for the global hot money investors who
are driven by a set of issues, especially the tapering timings of the US Federal Reserve,'
the study observed.
While the benchmark Sensex is trading well above the 20,000 mark for some time, it does not really reflect the real state of affairs, the study observed. 'Once prices fall sharply after the retail investor has bought in, he tends to wait for years since the feeling of suffering losses in one counter and making it up in another does not sink in,' Assocham secretary general D S Rawat said. Besides, retail investor confidence in the equity market does not see chances of restoration anytime in the near future, the study said. 'The retail investors' lack of confidence in the stock market is damaging the rupee as well since it has become dependent on the inflows and outflows of hot money,' it added. FIIs were gross buyers of shares worth Rs 7,46,334 crore and sellers of equities worth Rs 6,45,757 crore till 6 December. This translates into a net inflow of Rs 1,00,577 crore ($18 billion), according to Sebi data.
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