The India Cost of Capital Survey 2021 aims to understand the cost of capital that companies use for capital allocation and strategic decision making.
This study is based on the views of 197 respondents, comprised primarily of finance professionals from a mix of Indian and multinational as well as listed and unlisted companies, collected between December 2020 and February 2021.
Research at NSE
For countries experiencing rapid growth, development of a healthy financial sector is critical. As the economy grows, and complexity increases, the financial sector needs to become more efficient at managing resources. In parallel, the eco-system surrounding the growth of the financial markets too need to grow and there needs to be the development of supplementary sources of investment capital.
A critical element of a well-developed financial sector is the contribution of its key components and human resources to the reforms and policy that underpin the development of the industry, by provide quality intermediation and insights to market participants. Growth cannot be lopsided and benefit a section of a society by keep the other at bay. Hence, understanding of the role of the financial sector has increased markedly, but research and insights continue to mount.
At NSE, we have identified 3 focus areas of research to aid the development of an efficient micro-system to continue on the path of growth and financial inclusion, we set as a roadmap of this journey we started in 1994.
Financial Research Initiative
The Effect of Conflict on Lending: Evidence from Indian Border Areas
Author: Mrinal Mishra and Prof. Steven Ongena, University of Zurich
Corporate Governance Initiatives
Quarterly Briefing on: Shares with Differential Voting Rights
Chief Contributor: Bala N Balasubramanian
Latest Macro Review
RBI Monetary Policy: Dovish pause; liquidity support strengthened and widened
The RBI's Monetary Policy Committee (MPC) unanimously decided to keep the policy rates unchanged (repo rate: 4%) and continue with the accommodative stance as long as necessary for a sustainable growth revival. The MPC acknowledged the ramifications of the more virulent second wave and attendant restrictions, albeit less stringent than the first wave, on the recovery that was underway, partly offset by a favourable global demand environment, and has consequently reduced its FY22 GDP growth forecast from 10.5% to 9.5%. This is a tad higher than our GDP growth estimate of 9.2% (See our detailed report here). Inflation, on the other hand, is expected to remain within the RBI s target band and average at around 5.1% in FY22 vs. 5% estimated in April, supported by favourable base effects and expectations of a normal monsoon. That said, active supply-side intervention is crucial to minimise disruptions that may occur in the wake of persistence of the second wave and attendant mobility restrictions
Latest: India Ownership Tracker
Who owns India Inc.? Institutional ownership drops in the March quarter
In this edition of our quarterly report "India Inc. Ownership Tracker"1 , we extend our analysis of ownership trends and patterns in NSE-listed companies to include the data available for the quarter ending March 2021. We note: 1) An increase in Government ownership for the second quarter in a row, partly attributed to relative outperformance of some of the PSU companies during the quarter; 2) A decline in private promoter ownership for the second consecutive quarter, led by fall in foreign promoter share; 3) A slight drop in FII2 (foreign institutional investors) ownership following a spike in the previous quarter, reflecting renewed risk-off environment towards the quarter-end, thanks to COVID resurgence and rising US bond yields; 4) A decline in DMF (domestic mutual funds) share for the fourth quarter in a row, thanks to continued redemption pressures; 5) A modest increase in direct retail ownership, reversing the drop seen in the previous quarter; 6) FIIs continued to play the India story with an outsized bet3 on Financials, albeit with a tapered portfolio allocation, and retained their perennial cautious view on India s consumption as well as investment story; 7) Except for an equally strong negative view on Consumer Staples, possibly indicating valuation and demand concerns, DMF's portfolio stance contrasted with FIIs with a cautious view on Financials, albeit incrementally less so, an UW4 stance on Energy and an OW position on Industrials; and 8) Institutional money has remained concentrated to larger companies, with FIIs and DMFs having 93% and 85% of their investments made towards top 10% companies respectively in the March quarter