Indian Equity Markets: Up Against the Tide?

by Anshuman Jaswal, PhD, October 10, 2013
Industry Trends
Asia-Pacific

Abstract

The Indian economy has struggled in the course of 2012-2013. Some of the factors that have led to lethargic performance by the Indian equity markets include a fall in economic growth, a sharp rise in inflation, and a steep decline in the currency exchange rate.

In the report Indian Equity Markets: Up Against the Tide?, Celent analyzes the recent performance of the Indian cash and derivatives equity markets. In spite of a tough year for the country, its leading exchange, National Stock Exchange (NSE), seems to have weathered the crisis well. It became the third largest derivatives exchange in the world in 2012. While it has experienced a fall in its trading volumes in 2012, its decline was less than some of the other leading exchanges.

The estimated average daily turnover, the number of trades for index options, and the number of trades for stock options are all expected to rise in FY 2014 (April 2013 to March 2014). It seems that the derivatives market has benefitted from the recent uncertainty and continued the excellent growth that has made NSE the third largest derivatives exchange globally.

“The index options at NSE have become its leading derivatives product and are the second largest derivatives product by volume across global exchanges,” says Dr. Anshuman Jaswal, Senior Analyst with Celent’s Securities & Investments Group and author of the report. “Their performance is one of the main reasons NSE has been able to weather a difficult national and global economic environment and is well placed fundamentally to continue the progress made over the last few years.”

This report discusses the recent performance of NSE’s equity markets, beginning with a look at the various parameters of the cash equity markets, including the turnover, volumes, market concentration, market capitalization, and number of securities traded. After this, we discuss the equity derivatives markets at NSE. A comparison is made of growth of the different products, such as index futures and stock futures, and index options and stock options, with some expected to grow much more than others.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

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Table of Contents

Executive Summary

1

Introduction

4

Market Overview

5

 

Cash Equity

5

 

Equity Derivatives

10

Conclusion

15

Leveraging Celent’s Expertise

16

 

Support for Financial Institutions

16

 

Support for Vendors

16

Related Celent Research

17

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