A colloquium on the topic ‘Economic Reforms & Indian Securities Market’ was held at Sri Krishna Hall of School of Business, Amrita Vishwa Vidyapeetham, Coimbatore, on September 5, 2018. K. Sukumaran, the Dean of National Institute of Securities Market (NISM), handled the session. He started the talk with the story of economic reforms and spoke about how India was facing problems with BOP (Balance of Payments) in 1991.
He said, "The BOP was primarily because of the difference between exports and imports. When compared to the 1.1 billion USD foreign exchange in 1991, the current foreign exchange of India is approximately 404 billion USD.” He added, “India is the 6th largest economy (GDP – 7.5 % while the global growth rate is 3.5%). Inflation in India was 17% during 1991 and 4% in 2017."
Mr. Sukumaran spoke about the three important factors that have a wide scope of contribution to Industrial reforms- Liberalization, Privatization and Globalization. He said, "In 1991, the industrial licensing was abolished as it was not entrepreneur friendly. As India has been a developing country and capital starving, foreign capital has been invited to invest in India. The most important problem now being faced by the Indian economy is how to deal with Non – Performing Assets (NPAs). Only 3% of the Indian population have investments, compared to U.S. (40%) & China (20%). The average estimated long term returns in stock market is 14%."
Mr. Sukumaran further explained about Jan Dhan Yojna – An initiative by the Indian government to get the Indian population to open savings accounts, stock market inclusion and five kinds of Indian investors- Foreign Institutional Investors (FII), Domestic Institutional Investors (DII), High Net Worth Individuals (HNI), ordinary investors and retail investors. He mentione the measures to be taken to strengthen the Indian securities market such as fully automated trading systems, wide range of products, quantity of regulation and transparency. He threw light on the problems faced by retail investors such as lack of awareness, real estate booms and crashes, stock market volatility, protection of interest of retail investors, intermediaries, alternative investment avenues and technological problems.
He also gave tips for beginners in stock market:
- Start with a small amount.
- Have realistic expectations.
- Learn from failures.
- Invest in what you know.
- Don’t get emotional.
He explained do’s and don’ts for the investors in stock market:
- Invest only in fundamentally strong companies.
- Follow life cycle investing.
- Enter into mutual fund route.
- Don’t get greedy.
- Learn to sell.
- Deal with registered intermediaries.
- Don’t over-depend on comfort factors.
- Don’t be fooled by corporate governance awards.
- Be honest.
Mr. Sukumaran concluded the talk by giving information about the NISM certification.