Investor behaviour shifts with usage of independent equity research: CRISIL

Of the 109 companies under coverage, 51 companies had no coverage before the release of CRISIL report

Investor behaviour in the Indian equity market has undergone a shift with increasing usage of independent equity research for making investment decisions. According to a recent study by CRISIL Research, understanding the fundamentals and having access to additional information on the company are evolving as key drivers of investment decisions.

The CRISIL Research study was aimed at assessing the response of the market to the concept of independent equity research and gauging impact of its equity research reports on stock liquidity and investor awareness. CRISIL Research studied the trend in traded volumes, of 100 companies under its independent equity research coverage, one month before and after the release of its report.

The study revealed that more than half the companies under coverage witnessed a rise in traded volumes. The average daily traded volumes rose by 12% during the month following the release of the CRISIL report compared to the average daily traded volumes during the month prior to the release of the report.

The analysis also reflects that small cap firms, having a market capitalisation of less than Rs5 billion, saw the maximum increase of 43% rise in traded volumes. On similar lines, mid-cap companies, with a market capitalisation in the Rs5-Rs50 billion range, witnessed a 32% rise in traded volumes. According to Roopa Kudva, MD & CEO, CRISIL, "Our value proposition-to increase liquidity and transparency in equity markets and to provide investors with information on small and mid cap companies - is well reflected in the significant impact seen on traded volumes of these firms.

The positive response from investors underscores not only the value of these reports, but also the emphasis which we lay on evaluating fundamentals of companies." Investors are now able to make more informed decisions, due to additional information available on areas like financial strength, management capability and corporate governance standards followed by a company, through CRISIL's equity research reports.

Mukesh Agarwal, Senior Director, CRISIL Research pointed out, "As capital requirements of companies increase withoverall growth of the domestic economy, the importance of independent equity research will only amplify as investors seek independent opinions on business and financials of companies approaching the equity market." Nevertheless, equity research in Indian markets is still at a nascent stage, given that 90% of over 6000 listed companies do not have any research published on them.

Much of the focus so far has been on large corporates, due to which many of the small and mid-cap companies were seldom known to investors as potential alternatives. CRISIL's independent equity research is an attempt to bridge this gap. Of the 109 companies under coverage, 51 companies had no coverage before the release of CRISIL report. Similarly, 102 companies under CRISIL's equity research coverage are either small or mid cap companies with a market capitalization of less than Rs50 billion.


Experian, SBI sign membership agreement

SBI, India’s largest bank, contributing its credit data to Experian’s fast growing Indian credit bureau–further enhancing coverage

Experian Credit Information Company of India Pvt Ltd and State Bank of India (SBI) have signed a membership agreement to contribute data to Experian's credit bureau. The SBI's credit data will further increase the Experian credit bureau's data coverage and enhance the effectiveness of company's range of products and services.

Pardeep Khosla, CGM, State Bank of India said: "We believe that this membership will allow us to better leverage the multi-bureau environment in India. At SBI we are looking forward to using Experian's unique globally proven services which will enable us to better use data and analytics. Our partnership with Experian is an integral part of our growth strategy that will allow us to better manage credit risk and leverage our opportunities."

"We are pleased to have the State Bank of India as a member of our Credit information Company", said Mohan Jayaraman, Managing Director for Experian Credit Information Company of India Pvt Ltd. "With the inclusion of SBI's data and our advanced data loading capabilities, we now provide lenders with an even more comprehensive level of insight into the Indian consumer credit landscape. Our significant investment in creating leading Indian data matching capabilities combined with our experience of operating 16 consumer credit bureaus globally means that we are able to offer leading local services powered by our extensive global resources."


RBI not to intervene in forex market required as of now: Deputy governor

"If we do intervene at all, it would be with a very narrow perspective or narrow objective of smoothing of what might be a very volatile market situation, but nothing beyond that," RBI deputy governor Subir Gokarn said

New York: The Reserve Bank of India (RBI) on Friday said its intervention in the forex market, if any, would be limited to curbing volatility, but as of now, the situation does not call for any action even though the rupee has fallen to its weakest level in 28 months, reports PTI.

"We, at this point, do not see any intervention from a rate targeting view point. That is something that would reflect a change in policy stance, which we are not doing at this point," RBI deputy governor Subir Gokarn said in an interview to a private Indian news channel here.

Economists and experts have suggested that the central bank should intervene in the Indian forex market to halt the sharp depreciation in rupee value.

The falling rupee has become a cause of concern for policymakers as it could further push up inflation, given that the country imports about 80% of its crude oil requirement and pays for the same in US dollars.

"If we do intervene at all, it would be with a very narrow perspective or narrow objective of smoothing of what might be a very volatile market situation, but nothing beyond that," he further said.

The deputy governor's remarks came even as the Indian currency fell to Rs49.90 per US dollar, its lowest level since 14 May 2009. Thursday, the rupee had shed 2.5% to post its biggest single-day loss in nearly three years.

Tracking the meltdown in global stock markets, the rupee had yesterday plummeted by 124 paise to close at Rs49.57/58 per US dollar, setting off alarm bells in policymaking circles, as the weak domestic currency will make imports costlier and fuel inflation.


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