False Picture

Investment in the capital market was usually denoted as investment in equity shares and/or equity-related instruments and not pure and simple debentures. Raising of money through public issue of debentures (debt instrument alone) is a new phenomenon. The amounts raised by financial institutions, Tisco, Larsen & Toubro etc. are pure debts and these should not have been included in the primary market raisings.

The fact is that even big companies have stooped to siphoning of funds from their main companies to the companies/firms held by the promoters. Diversion of funds has become a norm. The resultant lowering of EPS is the main reason why investors have lost confidence.

 

It is a misnomer to show the figures of Sensex in support of a reasonable state of affairs of the capital market.

Overall, the value of the investments of general investors has been reduced to about 15 to 20 per cent of the selling prices. Hence, for a correct picture, it is essential to consider the entire market capitalisation of the listed companies instead of Sensex/Nifty companies.