Indian Financial Markets
An Insider's Guide to How the Markets WorkBy
- Ajay Shah, Senior Fellow at the National Institute of Public Finance and Policy, Bombay, India
- Susan Thomas, Assistant Professor, Indira Gandhi Institute of Development Research, Bombay, India
- Michael Gorham, Director, IIT Stuart Center for Financial Markets, Illinois Institute of Technology, Chicago, USA; 18-year veteran of the Chicago Mercantile Exchange
The whole world wants to invest in India. But how to do this successfully? Written by two Indian financial experts with a seasoned expert of the Chicago Mercantile Exchange, this book tells you the why and how of investing in India. It explains how India's financial markets work, discusses the amazing growth of the Indian economy, identifies growth drivers, uncovers areas of uncertainty and risk. It describes how each market works: private equity and IPOs, bonds, stocks, derivatives, commodities, real estate, currency. The authors include a discussion of capital controls in each section to address the needs of foreign investors. Learn about the the markets, the instruments, the participants, and the institutions governing trading, clearing, and settlement of transactions, as well as the legal and regulatory framework governing financial securities transactions.
Finance professionals in the securities, bond, and currency, derivatives, and commodities industry, portfolio managers, traders, investment bank analysts.
Hardbound, 264 Pages
Published: September 2008
¿This detailed and insightful examination of the numerous facets of the financial services industry in one of the world¿s most promising emerging markets is a must-read for anyone with a serious interest in Indian finance. Drawing on their long years of experience, the authors also make a number of recommendations for improvements in the regulation and structure of Indian financial markets which both government and private sector participants would do well to consider.¿ ¿ John P. Davidson, Managing Director, Risk Governance Group, Citigroup, United States "The investment world has been captivated by the phenomenal growth and returns from the Indian markets. What this book points out very eloquently is that this is just the beginning of the India story. Outside the equity markets, there are huge opportunities waiting to be tapped in currency, fixed income, commodities, and real estate. The authors have been thought leaders in the ongoing liberalization of the regulatory framework in the country and continue to play a key role in the transformation of the institutional landscape. This book lets you hear them relate the story. While such books typically tend to be marketed to foreign readers, I think this is a must read for every Indian banker." ¿ Sayee Srinivasan, Director, Asian Product & Market Development, CME Group Inc., India ¿Knowledge and understanding of the Indian financial markets is vital to any financial services firm with global aspirations. Shah, Thomas and Gorham have provided an overview of these markets that is sure to become a standard reference for practitioners. Written with a clarity and pace that is to be applauded, India¿s Financial Markets tells you the how and why of investing in India and provides essential information on the markets, institutions and instruments that are integral to Indian financial services. By focusing on the markets themselves, it avoids extraneous detail and provides practical insights regarding trading, clearing and settlement, as well as the legal and regulatory framework of Indian finance. It will be an invaluable guide for practitioners and students alike." ¿ Richard G. DuFour, Executive Vice President, Chicago Board Options Exchange, United States ¿India¿s Financial Markets is a compact treasury of practical insights on how India's financial economy really works. Anyone seeking to understand Indian financial and derivative markets will find no better source." ¿ Nick Ronalds, Executive Director, Futures Industry Association ¿ Asia ¿This book is the definitive introduction to Indian financial markets. It caters to the practitioner's interest in just the right amount of detail, while also providing insights based on analysis that will make this a delight for the discerning reader. It is a "must read" for anyone seeking to enter the financial sector in India, one of the fastest growing economies of the world. It is also a very useful introduction to Indian finance for anyone interested in understanding India.¿ ¿ Raghuram Rajan, Eric Gleacher Distinguished Service Professor of Finance, Graduate School of Business, University of Chicago, United States ¿For the reader looking for a high quality over-view of the Indian Financial System through the eyes of observers who have been intimately involved with the evolution of the modern Indian financial system, this is the perfect book. For each market it succinctly presents the current state of affairs using carefully researched datasets and also discusses problems and potential future directions in which the market may evolve.¿ ¿ Nachiket Mor, President, ICICI Foundation, India ¿India¿s Financial Markets is equally impressive in depth, content, simplicity and lucidity of writing style, and its treatment of critical core and emerging issues that influence Indian financial markets. ....a must-have for any financial analyst or economist located anywhere, who has a professional or personal interest in surveying, understanding, or investing in, the Indian economic and financial-market scene. ¿ ¿ Percy S Mistry, from the Foreword Chairman & CEO, Oxford International Group, UK ¿This is a great introductory book to Indian finance. It provides good and interesting insights into the Indian capital markets and a comprehensive understanding of the complexities involved in Indian finance. It will serve as a useful reference tool and you will find yourself coming back to the book time and again.¿ ¿ Nimesh Kampani, Chairman, JM Financial Group, India "India¿s Financial Markets presents a clear and concise overview of the current climate in Indian financial markets. From the discussions of specific products and markets to the explanations of sensitive cultural issues and practices, it is a must read for anyone planning to do business in India. Furthermore, for those who are involved in international financial markets ex India, it is imperative that you have at least a basic understanding of how Indian markets will intersect with the global financial landscape. This book provides that insight." ¿ Patrick Catania, Chairman, Asia West Group, Chicago, United States ¿What I love most about this book is the insight the authors provide regarding how thse markets really work. This is truly an insider's guide. There is no other work as current, complete and insightful. I really enjoyed this book.¿ ¿ Ravi Narain, Managing Director, National Stock Exchange, India
- CONTENTSForeword xiiiPreface xv1. The Economy 11.1 Overall Growth Experience 11.2 Understanding Indias Post-Independence Trajectory 31.3 Interpreting the Growth Experience 51.4 Trends and Volatility in GDP Growth 211.5 Conclusions 302. The Firms 332.1 The CMIE Database 332.2 The Large Nonfinancial Firms of India 342.3 Role of Equity Financing 402.4 Regulation of Firms 433. Private Equity and the IPO Market 453.1 Private Equity Investment 463.2 The IPO Market 524. The Public Equity Market 554.1 Products, Venues, Market Design 554.2 Liquidity 644.3 Derivatives 684.4 Risk and Return 724.5 Role of Indian Equity in Global Portfolios 79ixx Contents5. Government Bonds 815.1 Products in the Government Debt Market 815.2 Markets 905.3 Regulation and Market Access 935.4 Elusive Liquidity 946. Corporate Bonds 956.1 The Products 956.2 Markets 1066.3 Secondary Market Trading 1086.4 Regulation and Next Steps Forward 1097. Commodity Futures Markets 1137.1 A Little History 1137.2 Products in the Commodity Derivatives Markets 1157.3 Markets 1207.4 Market Outcomes 1277.5 Regulation and Legal Framework 1298. Real Estate 1338.1 Price Trends in Real Estate 1338.2 Accuracy of Prices 1358.3 Property Development 1368.4 Segments of the Overall Real Estate Market 1388.5 Investors 1468.6 Title and Transparency in Indian Real Estate 1488.7 The Sensitive Issue of Corruption 1498.8 Conclusion 1519. The Rupee 1539.1 Market Description 1539.2 Going Under the Hood 1569.3 A de facto Pegged Exchange Rate to the US Dollar 1579.4 Difficulties of Implementing the Pegged Exchange Rate 1589.5 Four Phases in INR/USD Volatility 1609.6 Conclusion 16310. Financial Firms 16510.1 A Birds Eye View 16510.2 The Nature of the Financial Firm in India 166Contents xi10.3 Infrastructure 16710.4 Transaction-Oriented Firms 16910.5 Banks 17310.6 Insurance Companies 18010.7 Pensions 18110.8 Mutual Funds 18310.9 Foreign Institutional Investors 18710.10 Private Equity Funds 18810.11 The Fundamental Difficulties of Fund Management 18911. Policy Issues 19111.1 The State of Indian Finance 19111.2 Reform 19311.3 The Agenda at SEBI 20111.4 Conclusion 21212. What Can Global Financial Firms Do with India? 21312.1 Portfolio Investment 21412.2 Private Equity 21512.3 FDI 21512.4 The Mauritius Route 21612.5 India-Related Financial Businessoutside India 216Appendix A. Sources 219Appendix B. Abbreviations 221Appendix C. Interpreting Those Strange IndianNumbers 225Bibliography 227Index 231