Mr. Ajay Tyagi, Chairman-SEBI, in his keynote address titled “Behaviour of Securities Market in India during the Pandemic period” at “SEBI-NISM Conference” provide insights on the behaviour of Indian stock market when the Indian bourses were performing unexpectedly upward while major index around the world were under pressure.

 

The discourse starts with the relevance of “Black Swan” event with current COVID-19 pandemic. It is to mention that “Black Swan” event refers to an event which is unpredictable, rare and catastrophic. However, there is unsettled argument among experts regarding unpredictability of pandemics like COVID-19 as increasing human invention in nature and climate change is already posing threats with devastating consequences.

 

Instead of reiterating actions of SEBI & Government, SEBI chairman concentrated his discussion on the four main wide areas-

1) Market Movement

 

Movement in Indian stock market since the declaration of COVID-19 as global pandemic, has been unprecedented. Market experienced rare steep fall of more than 10%. Markets have recovered in V shape and shows disconnection between trends of stock markets and real economy which may become cause of systematic instability. This disconnected market behaviour is also visible in many markets around the world and has no precedent to match.

 

2) Investor behaviour

 

Investor behaviour can be categorized in the following categories-

 

a) Individual investor: Participation of individual investors in stock market has increased with fast pace and growing as compared to pre-pandemic data. Demat Account opening data shows the real picture of such growth.

 

b) Mutual Funds: Trends of inflow/outflow in equity and/or growth schemes, decides the behaviour of mutual funds as institutional investor. Despite the outflows in equity schemes during the current financial year, there is an overall increase in the AUM of the Mutual Funds industry.

 

c) Foreign Portfolio Investor: One of the main reasons of unprecedented behaviour of Indian stock market is inflow by FPIs.

 

3) Corporate

 

Corporates are the main part of stock market and are facing drastic changes in the ways of interacting with shareholders and technology has been playing great role in these new developments. Further, fund-raising activities are also subject to new trends.

 

4) Unique Trends

 

Apart from above discussed issues, there are certain trends of importance like ESG investment which is getting attention of Indian investors also, Diversification through investment abroad, Increased adoption of technology by various participants of the stock markets

 

Views shared by SEBI chairman helps to create a broad view of behaviour showed by Indian stock markets in recent time and can be better understood by referring to the detailed draft. The summary has been developed based on the draft sourced from www.sebi.gov.in.