Indian Exchange-Traded Securities: Poised for Further Growth

by Anshuman Jaswal, PhD, August 6, 2009
Industry Trends


The Indian equity markets are showing signs of recovery. Equity market capitalization is expected to exceed 2008 levels in 2009 at US$1.9 trillion. However, the market is still some way off the 2007 high of US$3.3 trillion.



The Indian capital markets are advanced technologically, but need to continuously improve to be internationally competitive. In a new report, Indian Exchange-Traded Securities: Poised for Further Growth, Celent examines developments in the Indian equity markets since 2007 and focuses on the role of the derivatives market in enhancing the maturity and depth of the capital markets in India.

The Indian market continues to hold promise, as the economy is expected to grow above 6% even in the current economic downturn. India’s leading stock exchange, National Stock Exchange (NSE), is ranked third worldwide in terms of the number of equity trades in 2008, and is expected to overtake Bombay Stock Exchange in market capitalization in 2009. In spite of growth, however, the Indian corporate debt market is underdeveloped and lags far behind debt markets in developed and emerging economies worldwide.

"The Indian markets are becoming multidimensional. As opposed to being just an equity market growth story, we also have the development of the derivative and the debt markets," says Anshuman Jaswal, Celent analyst and author of the report. "The early success of the currency futures market is another sign of the Indian capital markets’ increasing maturity. The reintroduction of interest rate futures is the next eagerly awaited development."

This report begins by examining the leading equity markets in India. It analyzes the debt markets and their growth and concentrates on equity derivatives at the NSE, evaluating whether stock-based derivatives or index-based derivatives are more dominant. This is followed by a discussion of the currency futures market. The report also addresses the proposed introduction of interest rate futures. Finally, the report discusses the role of foreign institutional investors and the regulatory bodies.

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


Market Overview

Derivatives Market

Investor Characteristics

Market Infrastructure

Regulatory Issues


Looking Forward

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