The government’s directive to companies both in the public and private sector to increase the shareholding in all listed companies to 25 per cent will mean garnering Rs 1,60,000 crore from the market.
Under normal circumstances it should not be a problem considering that Indians are said to have stashed away 18,000 tonnes of gold worth $700 billion.
It is kept idle as Indian families see it as security against bad times. People trust gold more than equities and that is why getting the retail investor to put his surplus funds into the equity market is a challenge.
Sebi will have to bring in some reforms particularly in the initial public offer and the book building process if the retail investors are to subscribe to the IPOs and FPOs that will come to the market, said Mr Virendra Jain of the Midas Touch Investors Association.
This is particularly needed in the private sector which has misused the free pricing mechanism which has resulted in losses to the investors. Historically in the last three decades the conventional route for investors to the stock market was through IPOs.
There is another suggestion that the IPO shares should be put directly on the stock exchanges so that everyone gets a fair chance of getting shares.
Sebi could also think in terms of an alternate exchange so that the new companies can list on them with more flexible listing rules.
Mr Tarun Bhatia, director, capital markets, Crisil Research one of the important things is to give the retail investor independent information and we have tied up with the NSE to provide independent equity research of medium and small cap companies in a quarterly basis.