New Delhi: Debunking a campaign that stock
market was the playfield for a select few, India`s largest
exchange NSE has said that the country was way behind the US
in terms of large investors or brokers dominating the bourses.
Seeking to set the record straight in the face of a
"misleading" campaign, NSE CEO & MD Ravi Narain has written to
the Prime Minister`s Office and other authorities stating that
the bourse was working hard to create an awareness and rope in
retail investors to the extent possible.
The letter follows reports suggesting that Indian stock
market was shallow and trading was largely concentrated among
a few large investors, which started flowing in after the
government earlier this month informed the Parliament about
trading pattern at NSE in first quarter of 2010-11.
The Parliament was informed that the top 25 trading
members of NSE accounted for 42 per cent of cash equity and 43
per cent of equity stock derivatives turnover in the period.
Facing allegations that it was not doing enough for
growth of capital markets beyond large investors, NSE,
according to sources, informed the authorities that over
one-third of taxpayers or 1.2 crore people (rpt) 1.2 crore
people were participating in the market through it.
In the letter, also addressed to officials in Finance
Ministry, Planning Commission, SEBI and RBI among others,
Narain has said that large players` dominance in Indian
markets was less than developed markets such as the US also.
NSE is the country`s top stock exchange in terms of
trading volumes, while its older rival BSE comes a distant
second in terms of business size despite having larger number
of listed companies.
NSE has been accused of being monopolistic by its new
rival MCX-SX, which is fighting a legal battle against market
regulator SEBI over delay in approval to begin stocks trading.
In his letter, Narain said that it had submitted the data
on trading activity in response to a question by a Member of
Parliament, but some misleading reports have "selectively
quoted data from the above submission to try and denigrate the
growth and development of capital markets in India."
On the contrary, NSE said, it was taking various steps to
bring in retail investors from across the country and has
succeeded to a large extent in these efforts.
"In India, about 3.3 crore people paid income tax for the
financial year 2008-09. Of these, a remarkable 1.2 crore
people invest through the NSE," Narain said, adding that it
was also being ensured that "right kind of money is invested
in the markets by people who can afford to do so."
Besides, a large number of retail investors participate
in markets indirectly through mutual funds and insurance
schemes, NSE said, adding that "LIC, one of the most trusted
icons of the middle class, invests through the NSE."