-Sahil Gulani, FMG 24, FORE School of Management, New Delhi
Corporate Interaction Division (CID) of FORE School of Management, New Delhi, recently organized its Anubhuti session for the academic session 2015. An event, where industry leaders from across verticals visit the campus and update us on the latest trends and nuances of the corporate life. FORE School of Management was privileged to have Mr. K Sukumaran, Dean of National Institute of Securities Markets- School for Investor Education & Financial Literacy (SIEFL) & School for Regulatory Studies and Supervision (SRSS) to discuss Economic Reforms & Indian Securities Market. The discussion revolved around key reforms taken by Indian Govt. to improve financial health of the country, which included Industrial, Banking, Tax, Capital market, PSU and Insurance sector reforms.
There was a brief delegation on 3 criteria followed for rating Indian banking system i.e Capital Adequacy ratio, Non-Performing Assets, Return on Assets. It was also discussed how 5% of bank loans in India convert to non-performing assets, in spite of 0.9% of current ROA, which is alarming for Indian banks. Indian banking system is a mix of public and private sector banks with the former holding 76% of market share. This healthy mix with Public Sector banks being in the control of banking in India proved beneficial in times of recession, but government needs to work on increasing financial inclusion in the country which is currently as low as 50%.
Dr. Sukumaran gave us a measure of how investors are earning a high ROI of 15%, which is quiet rewarding in comparison to 8.5% interest that investors receive on bank fixed deposits. Albeit all this, 10% equity inclusion is a matter of concern for the Indian government and can only be cured by spreading more awareness. Most of the players in equity markets are FIIs, DIIs, High Net Worth shareholders and Retail Investors. He pointed out the problems of retail investors in equity share market to be – lack of awareness, stock market volatility, Intermediaries and Technological problems.
Dr. Sukumaran strongly believes in long term investment in equity share market rather than short term trading, and advised us all to be investors, and not traders. He discussed five golden rules for beginners in Equity share market which are as follows:-
- Start with small amount
- Have realistic expectations
- Learn from your failures
- Invest in what you know
- Don’t get emotional while trading
Steps like introduction of SCORES, simplification of tax norms, and abolition of CCI accompanied with transferring powers to SEBI, have all been taken by the government to improve business climate of the country. The changes have come a long way in helping the Indian capital market gain an orderly growth. In all, the session provided some valuable insights into the Indian securities markets.
FSM Delhi 