Won't allow market weakness to be leveraged, says Sebi chairman Ajay Tyagi

Sebi said the increase in oil prices, tighter global financial conditions, spillover risks from a global trade conflict are some of the key risks at this juncture

Market regulator Securities and Exchange Board of India (Sebi) on Tuesday said it won't allow manipulators to take advantage of the volatility in the stock market. "We have strong risk management systems in place. Manipulators will not be allowed to take advantage of the market weakness. We are vigilant," Sebi chairman Ajay Tyagi told reporters on the sidelines of capital markets conference organized by industry body FCCI.

Tyagi said the increase in international oil prices, tighter global financial conditions, spillover risks from a global trade conflict and rising regional geopolitical tensions are some of the key risks at this juncture.

The Sebi chief said the sustained fund-raising in the domestic market is "encouraging". He said a record amount of Rs 8.8 trillion was raised by way of both equity and debt in the domestic market last financial year and another Rs 2.3 trillion has already been raised in the first quarter of this financial year.

"The size of offerings has increased over time, thereby indicating increased capacity of the market to finance larger issues," Tyagi said.

He pointed out that mature companies accessing the market is a "comforting feature." "The median age of companies coming out with IPOs during the last two years was about 17 years. In contrast, the median age of companies coming out with IPO in the US is about 10 year," he said.

Private equity investors getting successful exit from their existing investments will help them channelize their investments towards other productive economic activities, he said.

Tyagi said the composition of the market has changed with share of financial sector going up and that of industrial sector coming down in the benchmark Sensex.

"A look at the top 100 companies by market capitalization shows that the share of financial sector has increased from 15 per cent in March 2008 to 23 per cent in March 2018 and that of the industrial sector has declined from 14 per cent to 12 per cent," he said.

When it comes to the IPO market, Tyagi said the share of the industrial sector has gone up while that of consumer discretionary, services and financial sectors have declined.

"The IPO market, therefore, appears to be indicating a trend, which probably will get reflected in the benchmark indices at a later stage," said the Sebi chief in his speech.

Tyagi referred to a recent report by KMPG, which had highlighted cyber-security, data Privacy, risk management and governance as key global regulatory challenges.

"Cyber security is clearly an area Sebi is actively involved in," he said adding that a high-powered committee is providing overall guidance to the market regulator for developing and maintaining cyber security and cyber resilience requirements that will be aligned with the world's best practices.

"Sebi needs to quickly upgrade its regulatory capacity to properly comprehend the nuances of technological changes with a view to stay ahead of the curve," Tyagi said.