DIs lending strong countervailing force to global trends: SEBI Chief

The countervailing force of domestic institutions have given tremendous resilience to the Indian capital markets in the wake of foreign capital outflow as seen in the December quarter of 2024, Securities & Exchange Board of India (SEBI) Chairperson Madhabi Puri Buch said on Friday.

“Our domestic [financial] institutions are lending a strong countervailing force to global trends which are some times negative and sometimes flat,” she said.

“That is one of the most attractive features of our markets for foreign investors as well, because they know if and when they have to leave the impact cost of leaving is very low and the fact that despite headwinds globally, the resilience of the Indian markets will continue to deliver returns to them due to the strong domestic demand,” she said while addressing at the SAMVAD summit organised by the market regulator.

Stating that the benchmark index [Nifty] has gone up from 9,000 to 24,000 in a short span, she said the India’s weightage in MSCI’s Emerging Markets Index has been increasing. “We are under 20% now. When the global passive mutual funds choose to invest in emerging markets, we will automatically get 20% of that huge fund,” she said.

Emphasizing on the importance of the bonds markets she said out of every 100 rupee raised today 60 rupees is being raised through bonds and it is leading to straight capital formation.

Ms. Buch said SEBI should be the facilitator and not come on the way of capital formation. “The purpose of existence of SEBI is capital formation,” she said.

She said something that has got unnoticed was preferential issues and Qualified Institutional Placements (QIPs) by which ₹3.3 lakh crore had been raised in the last 9 months. “By the year end [March 2025] it will easily reach ₹4.3 lakh crore, which is a huge number,” she said.

Pointing out that equity is only part of the overall fundraising instruments in the equity markets, Ms. Buch said in the last 9 months of FY25, ₹10.7 lakh crore capital was raised out of which ₹7.3 lakh crore was raised by the primary debt market. At the end of the financial year, a total of about ₹14 lakh crore would be raised through equity and debt, she said.

The SEBI Chairperson said going ahead Reits, InviTs and municipal bonds would have vast potential for growth. “In the next 10 years, these have potential to match or exceed that has been raised through equity and debt,” she said.

“When we talk about financialisation of savings, when we look at the number of AUM as a percentage of bank deposits. It has grown from 16% to 30%, which is almost double. The reality of today is that more and more citizens are participating in wealth creation of the nation, benefiting from the wealth creation and that has given us a huge amount of inspiration,” she said.

She said the soon to be soon-to-be-introducedlow-cost SIP of ₹250 would help in wealth creation for a larger segment of the population.