Sensex Surge: A Closer Look at the Indian Stock Market
SEBI raises alarms over unscrupulous practices in SME and real estate investment trusts (REIT) sectors, underlining the need for tighter regulations.
SensexSebiSmeReitIndian Stock MarketReal EstateSep 01, 2024
While the index touched 82,135 and Nifty peaked at 25,152, this surge tells only part of the story. Despite these highs, most individual stocks remain stagnant, with demand concentrated only in select large-cap stocks.
Mid and smallcap stocks have been witnessing selling pressure. The REIT have many problems, including compliance of regulations, SEBI chairman Madhavi Puri Buch tells Global Fintech Fest in Mumbai.
The SEBI earlier specified that the SMEs after listing their companies, resort to illegal means to paint a rosy picture about their businesses, pump up stock prices and exit. This way they have amassed Rs 14,000 crore over a decade since SME stocks were launched in 2012.
While financial sector risks in the larger and higher per capita countries are moderate, half of lower-income countries face significant risks, World Bank Financial and Prosperity Report 2024 denotes.
Buch says that a consultation paper proposing changes to the rules for trading index-based derivatives received 6,000 comments. This is an indicator of the investors’ concern.
The Sensex, short for the Stock Exchange Sensitive Index, is India’s oldest index. It is an economy-weighted, free-float index with 30 financially sound, well-established companies listed on the BSE.
Critics say that Indian market participants have narrow range of choices to make a true selection for benchmarks. It should capture 80-90 per cent of the market capitalisation to reflect the actual market movements.
The performance of office-based real estate investment trusts (REITs) in India has not been great success and yields are below the benchmark 10-year government paper and little capital appreciation since their listing.
Foreign portfolio investors (FPI) are the major players in Indian equity market. Foreign investors have been net sellers since the Union Budget 2024.
The FPI preferences are making a shift to debt market amid global turbulence. According to data from the National Securities Depository Limited (NSDL), FPIs have poured Rs 1,02,354 crore into the Indian debt market so far in 2024.
The booming stock market may be a bubble. The Middle class transferred their savings to mutual funds and stock market creating problems for banks. The Reserve Bank of India has flagged it.
Frequently Asked Questions
What is the current state of the Indian stock market?
The Sensex has closed above 82,000, but this surge does not reflect the true market buoyancy. Most individual stocks remain stagnant, with demand concentrated only in select large-cap stocks.
What are the concerns raised by SEBI regarding SME and REIT sectors?
SEBI has raised alarms over unscrupulous practices in the SME and REIT sectors, underlining the need for tighter regulations. SEBI chairman Madhavi Puri Buch has hinted at considering the possibility of changing the complexion of indices for benefiting investors in their long-term interest.
What is the performance of office-based real estate investment trusts (REITs) in India?
The performance of office-based REITs in India has not been great success and yields are below the benchmark 10-year government paper and little capital appreciation since their listing.
What is the trend of Foreign Portfolio Investors (FPI) in the Indian equity market?
FPIs have been net sellers since the Union Budget 2024. They have withdrawn Rs 16,305 crore from Indian equities in August, driven by a mix of global economic concerns.
Is the booming stock market a bubble?
Yes, the booming stock market may be a bubble. The Middle class transferred their savings to mutual funds and stock market creating problems for banks. The Reserve Bank of India has flagged it.
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