In a recent address at the Corporate Governance Summit organized by CII, Madhabi Puri Buch, Chairperson of the Securities and Exchange Board of India (SEBI), shed light on India's thriving investment landscape despite concerns over valuation.
Buch emphasized that despite India's higher Price to Earnings (PE) ratio compared to global averages, the country continues to attract investments due to the optimism and trust of global investors. This sentiment is reflected in the substantial investments pouring into the Indian capital markets, with a staggering Rs 10.5 lakh crore raised by the industry in the last 12 months alone.
While acknowledging concerns over valuations, particularly in medium and small-cap companies, Buch highlighted India's robust fundamental growth story. She noted that while the market may not be as cheap as during previous crises, it remains fairly valued, with profits above average.
A notable driving force behind India's resilient market is the increasing participation of retail investors, both directly and through mutual funds. Buch highlighted the significant rise in unique investors from 1 crore to 4.4 crore over the past decade, along with a substantial increase in assets under management.
The rise in investments is further evidenced by the record-high collection through Systematic Investment Plans (SIP) reaching Rs 19,186.58 crore in February 2024.
Buch also discussed the positive impact of the Trading plus one (T+1) trade settlement cycle, implemented in January 2023, which has significantly improved settlement efficiency, as measured by the delivery versus payment (DVP) ratio.
In addition, SEBI recently introduced the Beta version of the optional T+0 settlement cycle, offering same-day settlement, further enhancing market efficiency.
In conclusion, Buch's insights offer a comprehensive overview of India's investment landscape, highlighting its resilience, growth potential, and ongoing efforts to enhance market efficiency.
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