Sebi survey to probe investor apathy

The Securities & Exchange Board of India, or Sebi, has decided to conduct a survey to find out why investors are staying away from the securities market. This is the first time that the market regulator is planning such a survey of investors.

The Sebi annual report says the survey will try to find out “the reasons for not investing in the securities market”.

The survey, which is expected to be initiated in this financial year, will also find out the number of investors in the country and their preference for investment instruments such as equities, bonds, mutual funds, etc. There is at present no exact estimate of the percentage of people who prefer equity.

The purpose of the survey is also to spread the equity cult across the country as almost 60 per cent of trading the volumes still come from just three cities — Mumbai, New Delhi and Kolkata.

For example, the Mumbai region’s share in the total traded volume of National Stock Exchange is 40 per cent. New Delhi comes next with 10.14 per cent and Kolkata with 7.59 per cent. In the case of Bombay Stock Exchange, Mumbai contributes 23.44 per cent. Ahmedabad is next with 1.05 per cent.

In its annual report, Sebi said despite growth, hardly 3-4 per cent of the population is interested in the equity markets. Even in the case of the primary market, 90 per cent of initial public offer applications come from only 10 cities, according to a Sebi official.

The spread of depository participants (DPs) is an indication of the lack of a uniform equity cult. About 85-90 per cent of the DPs of both the depositories – National Securities Depository Ltd and Central Depository Services Ltd – are located in only 10 cities. NSDL has 803 DPs, out of which 688 are in 10 cities while CDSL has 740, of which 650 are in 10 cities, according to the Sebi annual report.

The report, however, says trading volumes went up by 76.7 per cent between 2005-06 and 2007-08. BSE and NSE together contributed more than 99 per cent of the turnover.

Sebi also quoted the World Federation of Exchanges to say that BSE and NSE had augmented their position in the world market. In terms of the number of trades in equity shares, NSE ranked third and BSE sixth.