Market Vitality Is Due To The Global Trend, Not Irrational: Said SEBI Chief

The Indian stock market proved its resilience against Covid adversities by maintaining strong growth in 2020. Despite the initial hiccups at the beginning of the lockdown, the market not only bounced back quickly but grew to show investors’ faith in the stability of the market. The primary market (IPOs) shone through the gloom of the pandemic with a dazzling debut by more than thirty corporates in a main-board initial public offering. The enthusiasm continued in FY22 with recently Zomato, the online food delivery platform, made a stunning listing in the stock exchanges. All these facts indicate a high demand for potential offers, and investors are hungry to invest in good businesses. Commenting on the market’s current status, SEBI Chief Ajay Tyagi said that the euphoria in the market is not irrational but backed by a global liquidity glut and low interest rates.

He was talking to FCCI’s annual capital market summit when he said there is no need to think that the current state of exuberance is irrational. It is very well supported by the high liquidity that is governing the global market. Coupled with a low interest rate, investors have turned to the capital market to park their investable corpus. However, he emphasized that companies need to be careful to adhere to SEBI’s disclosure norms to maintain the market’s integrity.

SEBI chief said that India as an emerging economy had done well compared to several others despite being hard hit by the raging pandemic. The Indian IPO market has emerged as one of the strongest contenders in the global arena.

IPO is one of the common ways of equity funding that allows businesses to mobilize capital from the market by selling their company shares to general investors. Indian IPO market has gained significant mileage and recorded steady growth over the years. Studies show that an IPO has become a reliable method for companies to raise capital. As a result, there is a stream of IPOs that increased year on year. The resilience is likely to continue in 2021 as we see a long list of companies that plan to launch their initial public offerings in the current FY.

Tyagi, however, emphasized that companies need to adopt better corporate governance standards through disclosure. Currently, corporations are required to make two sets of disclosures, namely periodic disclosure regarding company performance and financials and special disclosures whenever there is any change in material events that can impact stock price.

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