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Financial Services

June, 2010

The Indian economy is estimated to have grown by 7.4 per cent in 2009-10. According to the latest Central Statistical Organisation (CSO) data, financial services, banking, insurance and real estate sectors rose by 9.7 per cent in 2009-10.

As per the Securities and Exchange Board of India (SEBI), number of registered Foreign Institutional Investors (FIIs) as on May 31, 2010 was 1710 and the cumulative investments in equity since November 1992 to May 31, 2010, was US$ 77.2 billion , while the cumulative investments in debt during the same period were US$ 13.4 billion . The total FII inflow in equity during January to May 2010 was US$ 4.6 billion while it was US$ 5.9 billion in debt. Net investment made by FIIs in equity between June 1, 2010 and June 14, 2010 was US$ 530.05 million while it was US$ 875.73 million in debt, as per the latest data released by SEBI.

The average assets under management of the mutual fund industry stood at US$ 170.46 billion for the month of May 2010, as compared to US$ 135.58 billion in May 2009, according to the data released by Association of Mutual Funds in India (AMFI).

As on June 4, 2010, India's foreign exchange reserves totalled US$ 271. billion, an increase of US$ 9.87 billion over the same period last year, according to the Reserve Bank of India's Weekly Statistical Supplement.

Private equity (PE) firms invested about US$ 2 billion across 56 deals during the quarter ended March 2010, according to a study by Venture Intelligence, a research service focussed on PE and merger and acquisitions (M&A) transaction activity in India. The amount invested during the January-March 2010 quarter was the highest in the last six quarters. The figure was significantly higher than that during the same period last year (January-March 2009) which witnessed US$ 620 million being invested across 58 deals and also the immediate previous quarter (October-December 2009) where investments worth US$ 1,681 million were made across 102 deals.

Also, a study by Project Finance International (PFI), a source of global project finance intelligence and a Thomson Reuters publication has ranked India on top in the global project finance (PF) market in 2009, ahead of Australia, Spain and the US.

The study said the main market for PF in 2009 was the domestic Indian market, which raised US$ 30 billion, accounting for 21.5 per cent of the global PF market. This was up from US$ 19 billion in 2008.

Qualified Institutional Placements (QIPs)

QIP is a capital raising tool, whereby a listed company can issue equity shares, fully and partly convertible debentures, or securities other than warrants, which are convertible into equity shares, to a qualified institutional buyer (QIB).

In 2009, Indian companies had raised close to US$ 7.13 billion by way of 45 QIP issuances.

Stock markets

According to data from Bloomberg, India's market cap as a percentage of world market cap was 2.8 per cent as on December 31, 2009.

In 2009, there were 21 IPOs that raised US$ 4.18 billion as compared to 36 IPOs in 2008 that raised US$ 3.62 billion.