Sucheta Dalal recently posted the transcript of an excellent speech by Dr. R. H. Patil, Chairman of the Clearing Corporation of India Ltd. (CCIL), titled “Transformation of the Indian Capital Market”. Dr. Patil is well known for his contributions to the setup & launch of the National Stock Exchange (NSE) in 1994 and driving modern reforms across the Indian stock exchanges.
Interesting facts about the NSE, extracted from the speech:
- Based on an anonymous order matching system, doesn’t require floor specialists.
- Geograpical reach includes over 400 cities/towns across India.
- T+2 settlement system, among the fastest in the world.
- National Securities Clearing Corporation Ltd (NSCCL) acts as the central counter party guaranteeing all settlements.
- First truly demutualised stock exchange of the world; ownership and management of the exchange have been fully separated from the trading rights.
- Uses captive satellite-based communication technology.
How can we end 2005 without speculating on what’s in store for next year? And I’m not talking about annual horoscopes here; of much more interest is where the markets will take us in 2006!
Given the 40%+ runup in the BSE Sensex this year, its no wonder that money managers are concerned about valuations and volatility. Today’s Economic Times (Bangalore edition) expects the Sensex to top 10,000 assuming a continuation of strong liquidity inflows; but then, it also cites a Citigroup analyst who considers the index to be 30% overvalued with a 2006 target of 8500. Per Rediff, Motilal Oswal remains bullish, while Kotak Securities pegs the “fair value” of the Sensex in the 8000-9000 range. There’s even talk of a move to 12000 - that’s a further 30% jump from current levels! And for the astrologically inclined, Mumbai-based “astro-finance specialist” Pandit Raj Kumar Sharma expects the good times to continue for Indian investors.
Given the heavy participation of Foreign institutional investors (FIIs) in the markets, its worthwhile noting that they too remain bullish. But their returns are heavily dependent on exchange rate fluctuations and the recent volatility in the $:Rupee rate is certainly of concern. For 2006, expectations are for the rupee to trade in the 45-46 range versus the USD.
As to whether the Indian growth engine will revv faster next year, opinions range from guarded optimism to high expectations.
Bottom-line: No one really knows what’ll happen next year. But predicting the future remains a favorite past-time!
Among the few US bloggers who take interest in the Indian markets is Bill Cara, with whom I have collaborated several times since ‘04. Bill’s analysis of the capital markets is a must-read for all investors/traders; and he’s been regularly commenting on India as well.
His latest post offers a 2005 re-cap of India-related funds in the US (IIF, IFN), the $:Rupee exchange rate and the Sensex. As Bill notes, I plan to monitor the India Forum on his revamped site, and look for other ways to extend our joint efforts.
It seems as if this headline appears in the Indian financial media almost every other day. And why not, the BSE Sensex has risen from 6,600 to over 9,400 this year amid a lot of fanfare. Could there be a better time to (re)launch GalaTime as a blog focused on these markets?