Survey forecasts a buoyant capital market

NEW DELHI: Forecasting a buoyant capital market in the coming months, the pre-budget Economic Survey on Friday said it reflects investors confidence but highlighted the need to remove weaknesses in the bond market.

The survey for 2004-05, tabled by Finance Minster P Chidambaram in Parliament today, said "in coming months, considerable investment appears to be in the pipeline, reflecting confidence by domestic and foreign investors in the economic outlook."

It, however, said the bond market, which has witnessed a significant dropoff of turnover in recent period, has yet to find the policy framework through which the success of the equity market can be emulated.

The sound legal architecture underlying Sebi and the equity market, the shift to rolling settlement in 2001 and no entry barriers in financial intermediation have enabled the success of the equity market, it said.

To rapidly investigate the market behaviour, Sebi is developing a database about market participants and investors to give a Unique Identification Number to individuals and entities, the survey said.

Pointing out a rebound in primary market issue, particularly in initial public offerings of equities, in 2004, the survey said household investor participation increased based on stock market index returns of 72 per cent in 2003 followed by 11 per cent in 2004.