Capital Markets Give Thumbs Up To Economic Survey

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The Union Finance Minister, Nirmala Sitharaman, tabled the Economic Survey report 2021-22 in the Lok Sabha today, December 31. The government believes that the economy is likely to grow by 9.2 per cent in this fiscal after a contraction of 7.3 per cent in 2020-21. “The range of 8.0-8.5 per cent growth for FY2023 assumed by the Economic Survey appears to have built in a cushion for any disruption caused by future waves of Covid,” says Aditi Nayar, chief economist, ICRA. The continued thrust on government capex portended by the Economic Survey is enthusing, as it offers the best likelihood of instigating a durable growth recovery. This growth projection will boost investors’ confidence and improve market sentiment.

Capital Markets Provide Driving Force

The Indian stock markets gave a thumbs up to the Economic Survey report. On Monday, January 31, both the major indices, the BSE Sensex and the NSE Nifty, closed in the green territory with a gain of 1.42 per cent and 1.39 per cent, respectively.

The report highlights that 2021-22 has so far been an exceptional year for the capital markets. There was a boom in fundraising through initial public offerings (IPOs) by many new-age companies, tech start-ups and unicorns. In the April-November 2021 period, Rs89,066 crore was raised via 75 IPO issues; much higher than in any year in the last decade.

“The Sensex and Nifty scaled up to touch (their) peak at 61,766 and 18,477 on October 18, 2021,” the Economic Survey stated. Among major emerging market economies, Indian markets outperformed peers in the April-December 2021 period, it added.

The Economic Survey also pointed out that risk capital financed much of the economic revival. “In 2021-22, the risk capital (money raised from capital markets) has so far been more important than the banks in providing finance to the revival,” the report stated. The money raised via IPOs has been higher than ever raised in a single year in the last decade by a wide margin. However, the amount raised through rights issues declined by 62.6 per cent to Rs22,659 crore in April-November 2021, as compared to Rs60,608 crore during the corresponding period of previous year. Overall, during April-November 2021, Rs1.81 lakh crore was raised through equity issues through diverse modes such as public offerings, rights, Qualified institutional placements and preferential issues.

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