SEBI Annual Report: Indian Companies Raise Rs 9.8 Lakh Crore from Capital Market in FY23

During the fiscal year 2022-23, the Indian capital markets played a significant role in raising funds amounting to Rs 9.8 lakh crore, showing a growth of 4.6% compared to the previous year 2021-22.  

Corporates and infrastructure entities utilized various financial instruments such as equity (public, rights, preferential, QIP), debt (public and private placement), Alternative Investment Funds (AIFs), Real Estate Investment Trusts (REITs), and Infrastructure Investment Trusts (InvITs) to fulfil their financing requirements. 

Surprisingly, the equity and debt segments collectively contributed Rs 9.2 lakh crore to the overall capital formation during this period as per the annual report published by SEBI. 

In the debt segment, private placement emerged as the primary catalyst for resource mobilization during FY23, experiencing a substantial increase of 28% in funds raised compared to the previous year. During the year Rs 7.1 lakh crore was mobilized through private placement. 

Volatility in the secondary market, uncertain macroeconomic environment, and relatively subdued performance of many listed equities slowed down resource mobilization through public issuance of equities.

Furthermore. Alternative Investment Funds (AIFs) have emerged as one of the rapidly growing segments of the investment landscape. 

The demat accounts continued to increase and reached a total of 11.4 crore. However, the rate of incremental additions to demat accounts slowed down, possibly due to the base effect, intermittent market fluctuations, and a subdued trend in new listings on the Main Board as per SEBI. 

The equity derivatives segment experienced a remarkable increase of 119% in notional turnover. This growth was mainly driven by proprietary traders and individual investors actively participating in the market. In FY23 there was significant trading activity in currency and commodity derivative markets too, with the trading turnover of the respective markets rising by 60% in FY23. 

The uncertain global environment, withdrawal of economic stimulus measures, and interest rate hikes by Central Banks caused fluctuations in FPI flows throughout the year. FPI outflows from Indian markets that began in the previous fiscal’s second half continued into the first quarter of FY23.  

However, from Q2 of FY23, FPI flows turned positive with occasional moderate selling. In total, FPIs withdrew Rs 37,632 crore from Indian equities during FY23, marking a significant 73.1% decline in outflows compared to FY22. 

Meanwhile, strong domestic liquidity acted as a buffer, with domestic institutional investors injecting a net Rs 2.55 lakh crore in the Indian cash markets in FY23, as opposed to net FPI outflows of Rs 61,754 crore from the equity cash market. 

SEBI is exploring the feasibility of an optimal mechanism for instant settlement of trades when both parties have made 100% early pay-in of funds and/or securities. To address faster settlement and reduce overall system risk, a working group has been formed to examine the possibilities and recommend operational modalities for implementation.