MARCH 2003 VOL.

1 PART 3

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SEBI MONTHLY BULLETIN ■ VOL. 1 ■ PART 3 ■ MARCH 2003 ■ 2

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SECURITIES AND EXCHANGE BOARD OF INDIA

PAGE

ARTICLES
u Price Discovery and Volatility on NSE Futures Market 1
u Put Warrants on Fixed Price Buyback/Takeover Offers 12
u Stock Market Development and Economic Growth: The Evidence from India 16
SPEECHES
u Significance of Securities Market in the Growth of an Economy: An Indian Context 24
DISCUSSION PAPERS/COMMITTEE REPORTS
u Code of Conduct for Sub-Brokers 33
u Corporate Governance 34
u Exchange Traded Interest Rate Derivatives in India 37
u Review of SEBI (DIP) Guidelines 2000 38
PRESS RELEASES
u Codes of Conduct for Regulated Entities 40
u Report on Corporate Governance 40
u Review of SEBI (DIP) Guidelines 2000 40
u Governing Board of Ahmedabad Stock Exchange 40
u Investor Grievances 41
CIRCULARS & GUIDELINES
u Calendar for T+2 Rolling Settlement 42
u Risk Management for T+2 Rolling Settlement 43
u Cancellation of Certificate of Registration of brokers 44
u Monthly Reporting Format 45
u Electronic Data Information Filing and Retrieval 46
u Unique Client Code for Mutual Funds and FIIs 46
LEGAL ROUND UP
u Notifications 48
u Securities Appellate Tribunal Orders 54

ANNEXURES AND STATISTICAL TABLES

SEBI MONTHLY BULLETIN ■ VOL. 1 ■ PART 3 ■ MARCH 2003 ■ 3


Price Discovery and Volatility on NSE
Futures Market
M. T. RAJU AND KIRAN KARANDE* 
T
he Indian capital market has witnessed
many changes in the past decade. A major
reform initiated by SEBI was the introduc-
tion of derivatives products: Index futures, Index
options, stock options and stock futures, in a
phased manner starting from June 2000. It has
been about two and half years since the introduc-
tion of Index futures in India mainly as a risk
management tool for institutional and for other
investors. The two main functions of futures mar-
ket are price discovery and hedging. Futures mar-
kets are also known to have a stabilising effect on
the underlying spot market. Price discovery is ex-
pected to first take place in the futures market
and then it is transmitted to underlying cash mar-
ket (Pizzi et.al., 1998). Since futures market is dif-
ferent from cash market in terms of capital re-
quired, cost of transactions and other aspects, it
would be a forerunner of the cash market as far
as the information discounting is concerned. Thus
many small and risk averse investors can trade in
the cash market without taking the risk of bouts
of volatility. Therefore, this paper makes an at-
tempt to find out if price discovery actually takes
place first in the futures market.
A related issue is level of volatility. Introduction
of Index futures is expected to reduce volatility in
the cash market since speculators are expected to
migrate to futures market (Antoniou and Holmes,
1995). Many past studies in other countries mea-
sured impact of futures market on the volatility
in the cash market. In India as of now there is no
scientific study that used some of the modern
econometric techniques to measure volatility in
the cash market after the introduction of Index
*Dr. Raju is Economic Adviser, SEBI and Mr. Karande is Assistant General Manager, SEBI. The views expressed and the approach sug-
gested in this paper are of the authors and not necessarily of SEBI.
SEBI BULLETIN ■ VOL. 1
1
futures. There are some
studies which used stan-
dard regression and stan-
dard deviation techniques.
It is proved in India also
that volatility is a time
varying factor (Thiripal
Raju and Patil, 2002). Therefore, in this study Auto
Regressive Conditional Heteroscedasticity (ARCH)
family of techniques is used to capture time vary-
ing nature of volatility so that the estimators are
more reliable. These are the two important mo-
tives; price discovery and volatility that worked
as drivers of this research study.
Theoretical Pinning
Engle and Granger (1987) introduced the concept
of cointegration when two variables may move
together although they are nonstationary. The ra-
tionale behind the concept is that there exists a
long run equilibrium relationship between the two
variables. In the short run they may deviate from
each other but market forces, government inter-
vention etc., will bring them back together. Engle
and Granger (1987) extended this concept and
showed that cointegrated series have an error cor-
rection representation. With the error correction
representation, a proportion of disequilibrium in
one period is expected to be corrected in the next
period.
The results of the effect of Index futures on the
underlying spot market volatility are mixed. One
view is that derivative securities increase volatil-
ity in the spot market due to more highly lever-
aged and speculative participants in the futures
■ PART 3 ■ MARCH 2003 ■ 5
 2 SECURITIES AND EXCHANGE BOARD OF INDIA
market. The introduction of stock futures causes
an increase in volatility in the short run while there
is no significant change in volatility in the long-
run (Edwards, 1988). With increased volatility,
regulatory bodies may interfere in the markets to
enact further regulations. While these regulations
are certainly costly they may or may not reduce
stock price volatility.
An alternative view is that derivative markets re-
duce spot market volatility, by providing low cost
contingent strategies and enabling investors to
minimize portfolio risk by transferring speculators
from spot markets to futures markets. The low
margins, low transaction costs and the standard-
ized contracts and trading conditions attract risk
taking speculators to futures. Hence, futures are
expected to have stabilizing influence as it adds
more informed traders to the cash market, mak-
ing it more liquid and, therefore less volatile.
Literature Review
Price Discovery
u Kawaller et.al. (1987) examined the intra day
price relationship between S&P 500 Index and
the S&P 500 Index futures. Their results show
that both S&P 500 spot and futures markets
are simultaneously related on a minute to
minute basis throughout the trading day, and
that a lead lag relationship also exists. The lead
from futures to cash appears to be more pro-
nounced relative to cash to futures markets.
u Stoll and Whaley (1990) investigated causal
relationships between spot and futures mar-
kets using intra day data for both S&P 500
and the Major Market Index (MMI). Feedback
was detected, but the futures lead was stron-
ger than the cash Index lead.
u Chan et.al. (1991) examined the inter depen-
dence in price change. They found much
stronger bidirectional dependence between
stock Index and stock Index futures price
changes.
u Wahab and Lashgari (1993) used daily data
and cointegration analysis to examine the
temporal causal linkage between Index and
SEBI BULLETIN ■ VOL. 1
stock Index futures prices for both the S&P
500 and the FTSE 100 Index for the period
1988 to 1992. They find that although feed-
back exists between spot and futures mar-
kets for both the S&P 500 and the FTSE 100
indices, the spot to futures lead appears to be
more pronounced across days relative to the
futures to spot lead.
u Pizzi et.al. (1998) examined price discovery in
the S&P 500 spot Index and its three and six
month stock Index futures using intra day
minute by minute data. Cointegration analy-
sis is used. The results show that both the
three and six months futures markets lead
the spot market by at least twenty minutes.
There is bidirectional causality but the futures
market does tend to have a stronger lead
effect.
u Booth et.al. (1999) study intra day price dis-
covery process among stock Index, Index fu-
tures and Index options in Germany using
DAX Index securities and intra day transac-
tions data. They find that spot Index and In-
dex futures have substantially larger infor-
mation shares than Index options.
u Roope et.al. (2002) make a comparison of the
information efficiencies between the
Singapore exchange and the Taiwan futures
exchange for Taiwan Index futures listed in
both markets. The results provide strong evi-
dence to suggest that price discovery prima-
rily originates from the Singapore futures
market.
Volatility
u Edwards (1988) studied whether stock Index
futures trading destabilised the spot market
in the long run. Using variance ratio F tests
for the period June 1973 to May 1987, he con-
cluded that the introduction of futures trad-
ing did not induce a change in spot volatility
in the long run.
u Harris (1989) examined volatility after intro-
duction of Index futures by comparing daily
return volatilities during the pre futures (1975-
■ PART 3 ■ MARCH 2003 ■ 6
ARTICLES
1982) and post futures (1982 - 1987) period
between S&P 500 and a non S&P 500 group
of stock controlling for differences in firm
attributes. He found that increased volatility
was a common phenomenon in different
markets and Index futures by themselves
may not be a cause.
u Chan et.al. (1991) estimated the intraday re-
lationship between returns and returns vola-
tility in the stock Index and stock Index fu-
tures. Their study covered both S&P500 and
Major Market Index (MMI) futures. Bivariate
GARCH models were used to estimate vola-
tility. Their results indicate a strong inter
market dependence in volatility of spot and
futures returns.
u Kamara et.al. (1992) examined the influence
of innovations in the rate of productive ac-
tivity, unanticipated changes in the default
risk premium, unanticipated changes in dis-
count rate, unanticipated price level changes
and changes in expected inflation on the vola-
tility for the pre-future and post-future pe-
riod. The results indicate that the increase in
volatility in the post-futures period cannot be
completely attributed to the introduction of
futures trading.
u Antoniou and Holmes (1995) examined the
relationship between information and vola-
tility in FTSE 100 Index in the U.K using
GARCH technique. They find that introduc-
tion of FTSE 100 Index futures has changed
volatility in the spot market and attribute this
to better and faster dissemination of infor-
mation flow due to trading in stock Index
future.
u Gregory et.al. (1996) examined how volatility
of S&P 500 Index futures affects the S&P 500
Index volatility. Their study also examined the
effect of good and bad news on the spot mar-
ket volatility. Volatility was estimated using
EGARCH model. They find that bad news in-
creased volatility more than good news and
the degree of asymmetry was higher for fu-
tures market.
SEBI BULLETIN ■ VOL. 1
3
Methodology
Prices in the cash market and futures market are
expected to be inter-related. The products traded
are similar in nature. Stock index futures value is
derived from the value of the cash market price
plus interest rate. Any information; economic, po-
litical, social and other influences changes in prices
either in spot market or in futures market. Since
futures market has lesser trading costs, higher li-
quidity than spot market the information is first
expected to be reflected in the prices of futures
and then it is expected to flow to cash market
(Kawaller et.al., 1987). However, this may not be
true in all circumstances. Sometimes it can hap-
pen that the information is first discounted in the
cash market and then moves on to futures mar-
ket. Alternatively, information is reflected simul-
taneously in both the markets. In this paper what
is attempted to measure is the speed of the infor-
mation flow and its early impact on prices.
There are some econometric techniques to mea-
sure the direction as well as the intensity of the
information flow. Among others, Granger causal-
ity, Spectral Analysis and Cointegration are more
appropriate techniques useful to find out speed
of information flow and its intensity on prices. In
order to choose an appropriate technique between
these, the prices in their levels are tested for
cointegration and found to be cointegrated (see
end note 1). Therefore the cointegration technique
is preferred to Granger causality.
The use of cointegration analysis and error cor-
rection models explicitly takes into account non
stationarity and enables one to distinguish be-
tween short run deviations from equilibrium in-
dicative of price discovery and long run deviations
that account for efficiency and stability. If two
series (such as futures and spot prices) are non-
stationary but that a linear combination of the two
variables (such as the basis) is stationary so that
both are cointegrated then a bivariate dynamic
model that uses only first differences (with lags)
is misspecified because it ignores interim short run
adjustments to long run equilibrium.
The link between cointegration and causality
stems from the fact that if spot and futures prices
■ PART 3 ■ MARCH 2003 ■ 7
 4 SECURITIES AND EXCHANGE BOARD OF INDIA
are cointegrated, then causality must exist in at
least one direction and possibly in both directions.
Cointegration implies that each series be repre-
sented by an error correction model that includes
last period’s equilibrium as well as lagged values
of the first differences of each variable, temporal
causality can be assessed by examining the statis-
tical significance and relative magnitudes of the
error correction coefficients and the coefficients
on the lagged variables.
The possibility that one variable in a system of
cointegrated series is exogenous (independent)
within the error correction process motivates the
use of error correction models in evaluating price
discovery. The cointegrating vectors define the
long run equilibrium while the error correction
dynamics characterise the price discovery process,
the process whereby markets attempt to find equi-
librium. The primary purpose in estimating the
error correction model (ECM) is to implement
price leadership tests between futures and spot
prices. Tests of causality between cointegrated
variables should be conducted in an error correc-
tion framework because standard tests of causal-
ity overlook the reversion to equilibrium channel
of causality represented by et (basis). Causality
tests in the ECM framework involve testing sig-
nificance of the coefficients α and β. If these coef-
ficients are jointly insignificant, then there is no
Granger causality and hence there is no price dis-
covery.
In this paper it is proposed to test the impact of
introduction of stock index futures on volatility
of spot market. Several techniques are available
to measure volatility and its level; standard devia-
tion, and ARCH family techniques. ARCH family
techniques take into consideration time varying
volatility. As has been mentioned already (Thiripal
Raju and Patil, 2002) Indian stock indices do ex-
hibit time varying volatility property. Therefore,
GARCH (1,1) has been used to study the impact
of the introduction of stock index futures on spot
market volatility.
Econometric Techniques
Price changes in one market influence price
changes in the other market so as to bring about a
SEBI BULLETIN ■ VOL. 1
long run equilibrium relationship as given by the
equation:
Ft - α0 - β1St = et (1)
where Ft and St are contemporaneous cash and
futures prices at time t; α0 and β1 are parameters
and et is the classical error term (deviation from
equilibrium). According to Engle and Granger
(1987), if Ft and St are nonstationary (see end note
2) but the deviations et, are stationary, then St and
Ft are cointegrated (see end note 1) and equilib-
rium exists between Ft and St. For Ft and St to be
cointegrated, they must be integrated of the first
order. Performing unit root test on each univariate
price series determines the order of integration. If
each series is nonstationary in the levels, but the
first differences and deviations et, are stationary,
the prices are cointegrated of order (1,1), denoted
CI(1,1) with β1 as the cointegrating coefficient. An
error correction model exists for each series which
is not subject to spurious results. Ordinary least
squares (OLS) is inappropriate if futures or spot
prices are non stationary because the standard
errors are not consistent.
Cointegration implies that each series can be rep-
resented by an error correction model that in-
cludes last period’s equilibrium error as well as
lagged values of the first differences of each vari-
able. Hence, temporal causality can be assessed
by examining the statistical significance and rela-
tive magnitudes of the error correction coefficients
and the coefficients on the lagged variables. In this
study, the error correction model can be written
as:
Rf,t = α0f+α1f (Ft–1-St–1)+β1fRf,t–1+β2fRs,t–1+εft (2)
Rs,t = α0s+α1s (Ft–1-St–1)+β1sRs,t–1+β2sRs,t–1+εst (3)
where Rf,t is Nifty futures returns and Rs,t is Nifty
Index returns, α1f and α1s are the error correction
terms and βs represent short run effects.
Each of the above two equations is interpreted as
having two parts. The first part is the equilibrium
error. This measures how the left hand side vari-
able adjusts to the previous period’s deviation from
long run equilibrium. The remaining portions of
the equations are the lagged first differences which
represent short run effects of the previous period’s
■ PART 3 ■ MARCH 2003 ■ 8
 ARTICLES
change in price. If α1f is statistically insignificant
the current period change in the futures price does
not respond to last period’s deviation from long
run equilibrium. If both α1f and β2f are statistically
insignificant then the spot market price does not
Granger cause futures market price.
Both the dependent and explanatory variables
behaviour varies over time. If both dependent and
independent variables are nonstationary then the
estimates of simple regression are incorrect and
the results will mislead. Therefore, it is necessary
to test whether the variables are stationary or not.
Some of the most widely used techniques to test
stationarity are Dickey Fuller test and Augmented
Dickey Fuller test and Phillip Perron test. In this
study Augmented Dickey Fuller test has been used
to test for the unit root in variables. The results
are presented in Table No. 4. The hypothesis of
unit root has been rejected at 1% significant level.
To examine the effect of futures trading on the
underlying spot market, there is a need to study
pre and post futures period’s volatility. This can
be done by using standard deviation of daily log
returns as a measure of volatility. However, if vola-
tility is time varying, the above technique cannot
be used. Hence, in this study, the ARCH family of
models is employed to study volatility.
For studying the volatility, the following GARCH
(1,1) model is used:
Rs,t = α1Dmon +α2Dtue + α3Dwed +α4Dthu+α5Dfri+β1Rs,t-1+β1Rm,t+εst (4)
ht = α6+α7 ε2t-1+β3ht-1+α8D +α9ε2t-1D +β4ht-1D (5)
D is a dummy variable that takes the value 0 pre
futures and 1 post futures, Dmon - fri are dummy
variables for returns on Monday - Friday, Rs,t is
Nifty Index returns and Rm,t is BSE100 Index re-
turns, used as a proxy for market wide volatility.
The market capitalisation of BSE100 is more than
70% of total BSE market capitalisation as com-
pared to less than 50% for BSE Sensex. Though
there are several other indices such as S&P CNX
500, CNX Nifty Junior, BSE-500 and others, all
these suffer from one limitation or the other.
Capitalisation of CNX Nifty Junior is very small
while S&P CNX 500 and BSE 500 suffer from the
property of stale prices. Attempts are made to re-
SEBI BULLETIN ■ VOL. 1
5
move the influence of factors other than the im-
pact of index futures on volatility. In this process
it is identified that market proxy such as a broad
index and returns on any one of the week days
could also influence volatility. Therefore, week
days returns are also used in the model to elimi-
nate likely predictability effect of these on index
returns and consequently on volatility. To incor-
porate weekly returns dummies are used from
Monday to Friday one indicating returns of the
respective day and zero absence of the day.
Data Source and Time Period
Index futures on S&P CNX Nifty and BSE Sensex
started trading on National Stock Exchange (NSE)
and on The Stock Exchange, Mumbai (BSE) re-
spectively in June 2000. Volumes traded on BSE
are negligible and they account for less than 1% of
the total number of contracts traded on NSE and
BSE put together. Therefore, for the purpose of
the research study of price discovery only Index
futures on S&P CNX Nifty are considered. Daily
closing values of Index futures and BSE 100 In-
dex are considered from June 2000 till October
2002. Trading activity slowly picked up in Index
futures and peaked in September 2001. Thereaf-
ter with some fluctuations the activity has been
very high. Number of contracts traded varied be-
tween 1,00,000 to 1,50,000 (Chart 1) per month
during September 2001 to October 2002. The study
period is divided into two sub-periods on the basis
of low volumes (June 2000 to August 2001) and
high volumes (September 2001 to October 2002).
The distinction is made to assess the impact of
volume (liquidity) on long run price equilibrium.
Returns are calculated as log of ratio of present
day’s price to previous day’s price. Data are ob-
tained from NSE website of NSE and Bloomberg
for S&P CNX Nifty and BSE100 respectively.
Second part of this study deals with volatility
modeling, assessing its impact on cash market and
recommending policy directions. It is intended to
measure the impact of introduction of Index fu-
tures on the volatility. Past studies (Thiripal Raju
and Patil, 2002) have indicated that Indian stock
indices have a character of time varying volatility.
■ PART 3 ■ MARCH 2003 ■ 9
 6 SECURITIES AND EXCHANGE BOARD OF INDIA

Therefore, standard regression parameters will not Table 1 : Nifty Index futures contract
be able to capture volatility correctly. From Chart
Date of Inception June 12, 2000
2 it is vivid that simple measure of volatility i.e.
standard deviation will not be able to say much Underlying S&P CNX Nifty Index
about the impact of Index futures on volatility. Trading Cycle 3 months
Therefore, standard deviation has not been used Expiry Every month
to measure and explain the impact of Index fu- Contract size 200
tures on cash market volatility. ARCH family tech-
Tick size Re. 0.05
niques is expected to capture and model volatility
better (Antoniou and Holmes, 1995). There are Table 2: Descriptive statistics for daily returns
several variations of ARCH models: GARCH,
(June 2000 to October 2002)
EGARCH, etc. ARCH is found to be inadequate to
capture volatility. GARCH is expected to explain Statistic Nifty Futures Nifty Index
sufficiently the time varying volatility behaviour Minimum -0.0902 -0.0631
of cash Index. It is essential to eliminate the im-
Maximum 0.0599 0.0599
pact of confounding factors on the volatility of
cash market. For this purpose a market wide rep- Mean -0.0007 -0.0007
resentative variable, BSE100, has been chosen as Standard Deviation 0.0143 0.0145
a representative Index to capture the influence of Skewness -0.7623 -0.4665
the factors other than Index futures. Kurtosis 4.5630 2.2590
Some of the other reasons for choosing BSE100
Index are that the other indices constructed and The monthly Nifty futures volume since inception
maintained by India Index Services Limited (IISL) is shown graphically in Chart 1. It is evident that
do not have required length of past data. BSE100 the volume reached its peak in September 2001
market capitalisation covers roughly about 70% and thereafter there have been fluctuations in the
of the total market capitalization of BSE (as on volume traded. However, towards August - Sep-
November 14, 2002). Other broader indices such tember 2002 again volumes have almost reached
as BSE200 and BSE500 could consist of more stale its earlier peak.
prices which could lead to negative serial correla- Chart 1: Nifty futures volume
tion. Negative correlation could in turn lead to bi- (Number of contracts traded)
ased estimation of parameters. Owing to these
reasons BSE100 has been chosen as a surrogate Nifty futures volume

for market Index. For the volatility study data from 180000

January 1998 to October 2002, giving 2 ½ years of 160000

data pre and post futures are used. BSE100 Index 140000

is used as a proxy for market wide volatility. 120000

The contract details for Nifty Index futures are

100000
Volume

80000

provided in Table 1. The descriptive statistics for 60000

Nifty futures returns and Nifty Index returns are 40000

given in Table 2. First and second moments of both 20000

the series are almost identical. The mean is close 0

to zero and the standard deviation is 1.4%.

No -00
Ju 00
Au 00
Se 00
Oc 00

De 00
Ja 00
Fe 01
Ma 01
Ap 01
Ma 01
Ju 01
Ju 01
Au 01
Se 01
Oc 01
No 01
De 01
Ja 01
Fe 02
Ma 02
Ap 02
Ma 02
Ju -02
Ju 02
Au 02
Se 02
02
n-
l-
g-
p-

v-
c-
n-
b-
r-
r-
y-
n-
l-
g-
p-
t-
v-
c-
n-
b-
r-
r-

n-
l-
g-
p-
t

y
Ju

Month

SEBI BULLETIN ■ VOL. 1 ■ PART 3 ■ MARCH 2003 ■ 10

 ARTICLES 7
The volatility measured as standard deviation of Table 4: Unit root test results
daily log returns in per cent is tabulated below for
Variable Augmented Significance Optimal
pre-futures and futures period. From the above Dickey-Fuller level number
Table 3 it is clear that volatility has come down test statistic of lags
after introducing index futures contracts when Nifty futures -2.85 0.18 7
compared to before the pre-introduction period.
Nifty Index -2.81 0.19 7
Table 3: Daily Return Volatility
Nifty futures -13.30** 0.01 2
(Standard deviation in per cent) returns

Index Pre-futures (Jan Futures (Jun 00- Nifty Index -8.84** 0.01 6
98-Jun 00) Oct 02) returns

S&PCNX Nifty 1.96 1.45 **- Significant at 1% level.

BSE 100 2.11 1.68 The above results indicate that Nifty futures and
Sensex 2.03 1.54 Nifty Index are not stationary at their levels but
their returns are stationary. The results of the
The monthly volatility measured as standard de- cointegration tests for Nifty futures and Nifty
viation of daily log returns in per cent is shown in Index are presented in Table 5.
Chart 2 for pre-futures and futures period. With
Table 5: Cointegration test results
a naked eye one cannot certainly state whether
the volatility fell or rose, as the data move up and Cointegration Nifty futures
down. Therefore, there is a requirement to go for and Index
advanced econometric techniques to judge the Cointegrating vector -1.02
behaviour of volatility. Engle Granger 5.72**
Chart 2: Monthly volatility of Nifty, BSE 100 and p-value 0.01
Sensex Optimal number of lags 4

Monthly volatility of Nifty, Bse100, Sensex ** - Significant at 1% level

4.00
The above results indicate that Nifty futures and
3.50
Index are cointegrated of order 1. The results of
Monthl y standard d eviation (%)

3.00 the price discovery regression are presented in

2.50 Tables 6, 7 and 8.
2.00
Table 6: Price discovery results (Jun 00 - Oct. 02)
1.50

Coefficient Value t-statistic Significance

1.00

0.50
α0f -0.0007 -1.26 0.21
0.00 α1f -0.2109* -2.22 0.03
Ma 98
Ma 98
Ju -98
Se -98
No 98
Ja -98
Ma 99
Ma -99
Ju -99
Se 99
No -99
Ja -99
Ma 00
Ma -00
Ju 00
Se -00
No 00
Ja -00
Ma -01
Ma 01
Ju -01
Se 01
No 01
Ja -01
Ma 02
Ma -02
Ju -02
Se 02
02

β1f -0.0732 -0.51 0.61

n-
r-

p-

n-

l-

n-

y-

p-

r-

l-
p-

n-

l-
p-
y
l

r
y

p
v

v
n

r
y
Ja

Month

β2f 0.1496 1.06 0.29

α0s -0.0006 -0.99 0.32
Results and Analysis α1s -0.0062 -0.06 0.95
The results of the unit root tests for Nifty futures β1s 0.0197 0.14 0.89
and Nifty Index are presented in Table 4.
β2s 0.0938 0.65 0.52

*- Significant at 5% level

SEBI BULLETIN ■ VOL. 1 ■ PART 3 ■ MARCH 2003 ■ 11

 8 SECURITIES AND EXCHANGE BOARD OF INDIA

From the Table 6, it is clear that for the entire pe- Table 9: Volatility results (Jan. 98 - Oct. 02)
riod (June 2000 to October 2002) there is no cau-
Coefficient Value t-statistic Significance
sality from either futures to spot or vice versa. Also,
only the futures market (and not the spot market) α1 -0.0005 -0.56 0.57
responds to a deviation from equilibrium. α2 -0.0007 -0.74 0.46
Table 7: Price discovery results (June 00 - Aug. α3 0.0028** 3.38 0.01
01) α4 0.0004 0.50 0.62

Coefficient Value t-statistic Significance α5 -0.0008 -0.84 0.39

α0f -0.0009 -1.12 0.26 β1 0.0470 1.71 0.09

α1f -0.0549 -0.45 0.65 β2 0.2916** 8.93 0.01

β1f -0.3789 -1.16 0.25 α6 0.0167* 2.16 0.03

β2f 0.4809 1.69 0.09 α7 0.0244 1.87 0.06

α0s -0.0009 -1.05 0.29 β3 0.9272** 30.43 0.01

α1s 0.1604 1.22 0.22 α8 0.0083 0.84 0.40

β1s 0.4101 1.28 0.20 α9 0.2288** 3.75 0.01

β2s -0.2894 -0.76 0.45 β4 -0.2892** -4.61 0.01

From the Table 7, it is clear that for the period * - Significant at 5% level ** - Significant at 1% level
(June 2000 to August 2001) there is no causality From the Table 9, it is clear that volatility has re-
from either futures to spot or vice versa. Also, nei- duced post futures since β4 is significantly nega-
ther the futures market nor the spot market re- tive. The result is important in light of the signifi-
sponds to a deviation from equilibrium. cance of β2 which indicates that market volatility
Table 8: Price discovery results (Sep. 01 - Oct. 02) has been accounted for properly. NSE used to fol-
low accounting period settlement (see end note 3)
Coefficient Value t-statistic Significance starting from Wednesday and ending on the fol-
α0f -0.0008 -1.05 0.29 lowing Tuesday. Wednesday being the first day it
α 1f -0.4788** -3.65 0.01 is advantageous for traders to buy/sell and keep
the position open till next Tuesday. Investors get
β 1f 0.4314* 1.96 0.05
longest possible period without full investment.
β2f -0.4140* -2.19 0.03 Other major Stock Exchange, BSE used to follow
α0s -0.0005 -0.71 0.47 Monday to Friday accounting period settlement.
α1s -0.2838* -2.17 0.03 Owing to this different accounting period settle-
ment there were arbitrage opportunities available.
β1s -0.6324** -3.42 0.01
It was observed that investors shift their positions
β2s 0.7140** 3.27 0.01
from other exchanges to NSE on Wednesday due
* - Significant at 5% level ** - Significant at 1% level to the above mentioned reasons (Thiripal Raju and
From the Table 8, it is clear that for the period Patil, 2003). Therefore, it could be possible that
(September 2001 to October 2002) there is cau- Wednesday returns are found to be positive and
sality from both futures to spot and vice versa. significant. The study period vastly comes from
Also, both the futures market and the spot mar- accounting period settlement. Therefore, the in-
ket respond to a deviation from equilibrium. fluence of Wednesday is observed.

The results for the GARCH (1,1) model for the The results for the GARCH (1,1) model for the
period January 1998 to October 2002 are pre- period March 1999 to August 2001 are presented
sented in Table 9. in Table 10.

SEBI BULLETIN ■ VOL. 1 ■ PART 3 ■ MARCH 2003 ■ 12

 ARTICLES 9
Table 10: Volatility results (Mar. 99 - Aug. 01) use these results to predict impact of shocks to
the futures market on cash market.
Coefficient Value t-statistic Significance
Tables 6, 7 and 8 present the results of price dis-
α1 -0.0004 -0.37 0.57
covery. Excepting coefficient α1f all other coeffi-
α2 -0.0008 -0.66 0.46
cients are found statistically insignificant even at
α3 0.0037** 3.50 0.01 5% level. This indicates information gets reflected
α4 0.0002 0.19 0.62 first in the futures market. From the results it is
α5 -0.0004 -0.38 0.39 very difficult to say how much time it takes to go
to cash market. One of the constraints of the data
β1 0.0249 0.56 0.57
is that daily close values are used whereas the in-
β2 0.6049** 11.63 0.01 formation might get transmitted much faster. This
α6 -0.0005 -0.11 0.91 particular aspect can be stated more authorita-
α7 -0.0040 -0.21 0.83 tively only if high frequency data is used for this
purpose. High frequency data is currently not
β3 0.9989** 1414.61 0.01
available for spot market Index in India, therefore
α8 0.0059 1.32 0.19 they could not be employed in the equation.
α9 0.1800** 2.74 0.01
Volatility
β4 -0.1883** -3.50 0.01
Tables 9 and 10 provide coefficients, t statistics and
* - Significant at 5% level ** - Significant at 1% level significance levels of coefficients for two differ-
From the Table 10, it is clear that volatility has re- ent periods. First period considers pre and futures
duced post futures since β4 is significantly nega- period data from January 1998 to October 2002.
tive. The result is important in light of the signifi- This has equal windows before and after intro-
cance of β2 which indicates that market volatility duction of futures. The second period which is the
has been accounted for properly. sub-period of the first one takes into account when
Index futures were less popular. This division has
Analysis of Results and Recommendations
been considered to examine whether there is any
Price discovery perceptible change in the volatility due to change
Tables 5, 6, 7 and 8 present results of co-integra- in liquidity. Table 9 depicts the data of first period
tion and price discovery (equations 1, 2 and 3). and Table 10 for the second period. From Table 9
Table 5 gives information flow from one market it is clear that benchmark Index, BSE100, constant
to another. Engle and Granger methodology has of GARCH model, lag of square of error term,
been used to find out co-integration of futures and dummy of lag of square of error term, dummy of
cash market. Null hypothesis is that both the mar- lag of variance are found significant at 5% level, in
kets are independent (not co-integrated). Results fact the constant is significant at 1% level also.
indicate (Table 5) null hypothesis is rejected at 1% Since lag of variance has negative significant co-
level. This means that both the markets are inte- efficient that indicates introduction of futures re-
grated. Information flows from one market to duced volatility in the cash market. Second period
another market. The results are very useful to also exhibit identical behaviour. β4 is negative and
regulators as well as to market participants. Any significant. Only difference is that the magnitude
regulatory initiative on futures market will have and reduction of volatility is slightly lower. This
its desired impact on cash market. Therefore, regu- could be attributed to some extent to less liquid-
lators can take actions in the futures market such ity that was prevalent in the first period. In other
as reduction in contract size, changes to margins words it can be said that higher liquidity is ex-
and others which will have their impact on the cash pected to decrease volatility. Regulator should take
market. Market participant such as investors can all necessary steps to further enhance liquidity in
the futures market.

SEBI BULLETIN ■ VOL. 1 ■ PART 3 ■ MARCH 2003 ■ 13

 10
Volatility has been found reduced after the intro-
duction of Index futures. The following sugges-
tions may be implemented to further improve ef-
ficiency, liquidity and reduce volatility : a) Futures
contracts on more number of indices can be in-
troduced b) Mini size (smaller value contracts)
may be permitted c) Efforts may be made to look
at margin imposition system and reduce margins
without compromising on the integrity of the mar-
ket and d) Right now institutional participation
appear to be negligible in the total turnover, there-
fore, efforts should be made to enhance their role
in derivatives participation.
End Notes
1. Cointegration - Suppose Xt and Yt are two non-
stationary series. In general we would expect that
a combination of Xt and Yt is also non-stationary.
However, a particular combination may be sta-
tionary. If such a combination exists, we say that
Xt and Yt are cointegrated. Two cointegrated se-
ries will thus not drift far apart overtime, e.g. fu-
tures and spot prices, consumption and income
(Ramanathan, 2002). The econometric technique
regression assumes that mean values are station-
ary (do not change much) over any study period.
If the mean values of a parameter keep changing
from period to period then estimated coefficients
will not provide unbiased estimates. Therefore, it
is necessary to test the stationarity of the depen-
dent and independent variables.
2. Stationarity - Broadly speaking a data series is
said to be stationary if its mean and variance are
constant (non-changing) over time and the value
of covariance between two time periods depends
only on the distance or lag between the two time
periods and not on the actual time at which the
covariance is computed (Gujarati, 1995). The cor-
relation between a series and its lagged values are
assumed to depend only on the length of the lag
and not on when the series started. This property
is known as stationarity and any series obeying
this is called a stationary time series. It is also re-
ferred to as a series that is integrated of order zero
or as I(0) (Ramanathan, 2002).
3. Accounting period settlement - Under account-
ing period settlement all transactions (purchases
SEBI BULLETIN ■ VOL. 1
SECURITIES AND EXCHANGE BOARD OF INDIA
and sales) of Wednesday to Tuesday are cleared
and settled in a batch mode. Therefore, purchases
and sales of day one can be kept open till close
hours of following Tuesday without having taken
delivery/given delivery. The financial implication
of this process are quite different from rolling
settlement T+5 or T+3 therefore, stock prices are
expected to behave differently on different days.
References
1. Antoniou A and P Holmes (1995), Futures trad-
ing, information and spot price volatility : evidence
for the FTSE 100 stock Index and futures con-
tract using GARCH, Journal of Banking and Fi-
nance, Vol 19, p 117 - 129
2. Booth G G, R W So and Y Tse (1999), Price Dis-
covery in the German equity Index derivatives
markets, The Journal of Futures Markets, Vol 19,
No. 6, p 619 - 643
3. Chan K, K C Chan and G A Karolyi (1991), Intra
day volatility in the stock Index and stock Index
futures markets, Review of Financial Studies, Vol
4, p 657 - 683
4. Edwards F R (1988), Does futures trading increase
stock market volatility ?, Financial Analysts Jour-
nal, Jan/Feb, p 63 - 69
5. Engle R F and C W J Granger (1987), Cointegration
and error correction : representation, estimation
and testing, Econometrica, Vol 55, p 251 - 276
6. Gregory K and T Michael (1996), Temporal rela-
tionships and dynamic interactions between spot
and futures markets, The Journal of Futures Mar-
kets, Vol 16, No 1, p 55 - 69
7. Gujarati Damodar N (1995), Basic Econometrics,
3rd edition, McGraw Hill Inc.
8. Harris L H (1989), The October 1987 S&P 500 stock
futures basis, Journal of Finance, Vol 44, p 77 - 99
9. Kamara A, T Miller and A Siegel (1992), The ef-
fects of futures trading on the stability of the S&P
500 returns, The Journal of Futures Markets, Vol
12, p 645 - 658
10. Kawaller I G, P D Koch and T W Koch (1987), The
temporal relationship between S&P 500 futures
and the S&P 500 Index, Journal of Finance, Vol
42, p 1309 - 1329
11. Pizzi M A, A J. Economopoulos and H M O’Neill
(1998), An Examination of the Relationship be-
tween Stock Index Cash and Futures Markets : A
■ PART 3 ■ MARCH 2003 ■ 14
ARTICLES
Co-integration Approach, The Journal of Futures
Markets, Vol 18, No. 3, p 297 - 305
12. Ramanathan Ramu (2002), Introductory Econo-
metrics with Applications, 5th edition, Thomson
Learning Inc.
13. Roope M and R Zurbruegg (2002) The intra day
price discovery process between the Singapore
exchange and Taiwan futures exchange, The Jour-
nal of Futures Markets, Vol 22, No. 3, p 219 - 240
14. Ross S A (1989), Information and volatility : the
no arbitrage martingale approach to timing and
resolution irrelevancy, Journal of Finance, Vol 44,
p 1 - 17
15. Stoll H R and R Whaley (1990), The dynamics of
stock Index and stock Index futures returns, Jour-
SEBI BULLETIN ■ VOL. 1
11
nal of Financial and Quantitative Analysis, Vol 25,
p 441 - 468
16. Thiripal Raju M and Prabhakar R Patil (2002),
Index futures: Volatility changes - Indian case,
Udyog Pragati, The Journal for Practising Manag-
ers, Vol 26, p 51 - 66
17. Thiripal Raju M and Prabhakar R Patil (2003),
Impact of Rolling Settlement on Day-of-the Week
Effect, Forthcoming Working Paper
18. Wahab M and M Lashgari (1993), Price dynamics
and error correction in stock Index and stock
Index futures markets: A cointegration approach,
Journal of Futures Markets, Vol 13, No. 7, p 711 -
742
■■
■ PART 3 ■ MARCH 2003 ■ 15
 12
Put Warrants on Fixed Price Buyback/Takeover Offers
MANISH BANSAL* 
T
he facility of buying back of shares by the
listed companies was ushered in the Indian
securities market in 1998 end. The first com-
pany, which took the lead and initiated the pro-
cess, was Fortune Financials and since then many
companies have completed their buy back offers.
As stipulated in the Regulations, companies may
buy back their shares by any of the following
methods:
u Through the fixed price tender offer on pro-
portionate basis
u Through book building route (called reverse
book building)
u Through open market purchase
While in case of fixed price tender offer, the pur-
chase price per share is fixed by the company and
is disclosed to the investors, in the book building
case, it is determined through free interaction of
demand and supply forces. In the third method
i.e. open market purchase, purchase price is the
market price of the share and varies from trans-
action to transaction.
Takeover regulations also provide for the fixed
price tender offers i.e. an acquirer can invite in-
vestors to offer their shares to the acquirer at the
pre-determined fixed price. Indian securities mar-
ket has witnessed large number of fixed price take-
over cases.
This paper aims to instigate the companies, com-
ing out with the fixed price buy back/tender of-
fers, to issue put warrants to the investors on pro-
portionate basis. Put warrants are essentially the
put options (option to sell), which offer the right
to the investors to sell their shares to the company
back/acquirer at a specific price (strike price of
options). Because there is a specific price on the
*Assistant General Manager, SEBI. The views expressed and the approach suggested in this paper are of the author and not necessarily of
SEBI.
SEBI BULLETIN
SECURITIES AND EXCHANGE BOARD OF INDIA
put option, it is a perfect
substitute to the fixed
price offers in the prevail-
ing form. But, the opera-
tional mechanism of the
product would be differ-
ent and would offer host
of advantages to the investors, issuers and
market.
Value Drivers
The value drivers of the proposed put options
approach are:
Consistent Pricing
It may be observed from any buyback/takeover
offer in the past that whenever the buyback/ten-
der offer price has been higher than the actual
stock price in the cash market, price of the stock
goes up and then after the offer is complete, it
comes down. It creates enormous inconsistency
in the price of the stock. Let us look at some of the
recent cases.
Reliance Industries made a tender offer for the
shares of the IPCL for Rs. 231 per share, which
took place in August 2002. Price of the IPCL was
around Rs. 50-60 in the month of January 2002,
went up to touch Rs. 150 - 160 in the month of
June - August 2002, and then came down sharply
to Rs. 70 or so after the offer. It may be seen from
the price pattern in Chart 1.
Similarly, Bajaj Auto came out with a buyback
offer at Rs. 400 per share. Offer opened on Sep-
tember 18, 2000. Prices of the stock were consis-
tent till August end then after the closure of the
offer stock went down drastically. The price pat-
tern of the stock may be observed from Chart 2.
■ VOL. 1 ■ PART 3 ■ MARCH 2003 ■ 16
 ARTICLES 13
The aforesaid pricing pattern before the comple- or part acceptance of their shares by the com-
tion of the offer is the product of the arbitrage pany/acquirer in case of over subscription. This
transactions. Arbitrage opportunities arise when results in the risk to them, assuming that the mar-
the buy back/tender offer price is higher than the ket price after the buy back/acquisition is gener-
current market price. Some arbitragers buy the ally lower than the repurchase price. This phenom-
stock from the market, register the shares in their enon prevents the cash market price to actually
name before record date for the purpose and then touch the buy back/tender offer price. Therefore,
tender the shares in the buy back/tender offer. the price of the stock goes up but to discount for
This results in a cool profit for these arbitragers. the risk involved in the arbitrage it would always
Chart 1: Price Pattern of IPCL be significantly less than the buyback/tender
IPCL
offer price.
18 0 Offering put option would offer the market with
16 0 the consistency in the stock prices by absorbing
14 0 the difference between the cash price and the
12 0 buyback/tender offer price. These options/war-
10 0 rants would get listed and traded in the market.
P ric e

As they would trade to capture the difference be-

C lo s e

80

60 tween the cash and the tender offer price, this

40 would eliminate the price rise and fall in the stock,
20 which would result in consistency in the price of
0 the stocks.
2

2
6/ 002

7/ 0 02

7/ 2

5/ 2

/3 02
7/ 0 02

2/ 2

8/ 0 02
/9 0 2

2
/4 0 2

2
2

9/ 002

2
2

2
/6 2

7/ 0 02

2
02

For example, assume a stock is trading at Rs. 100,

20 20 0
0

18 20 0

18 20 0
18 20 0
19 200

17 200
27 20 0

00
28 2 00

29 20 0

28 20 0

26 200

15 0 0
29 200

2 7 2 00

28 2 00

0
18 20
18 20

2 9 20
0

20
20

/2
/2

/2

/2

/2

/2

/2
/2

/2

/2
/

/
/

/
9/

3/
/

/
8/

6/

4/

1/
0/

/8
/9

/7

/5
10

/7

/5

/3

/2

/1
/8

/6

/4

/2

/1
9/
8/

6/
/1
9/
21

and the buy back/takeover offer price of the stock

D AT E

Chart 2: Price Pattern of Bajaj Auto is Rs. 120. In the present scenario the price of the
B a ja j A u to
stock would go up to touch 120. Alternatively, put
4 50
option/warrant issued for the purpose would cap-
400
ture the difference of Rs. 20 and would theoreti-
350 cally trade at Rs. 20. Practically this warrant would
30 0 always trade at a price slightly lower than the Rs.
2 50 20 for liquidity considerations, transaction cost in
P ric e

the arbitrage and the profit to the arbitragers. As

C lo s e

200

1 50 the price difference between the cash and the ten-

100 der offer price is captured by the warrant, this
50
would result in the consistency of the cash mar-
0
ket prices.
/8 0 0

/6 0 0
/7 0 0
/8 0 0

/6 0 0

/4 0 0

/3 0 0
/5 0 0

00
/9 0 0

9 0

/8 0 0

8/ 0

/7 0 0

/6 0 0

/5 0 0
/9 0 0

5 0

/4 0 0

4/ 0

/3 0 0

3/ 0
0

/5 00
0

1/ 0
11 0

0
0
10 00

7/ 00

5/ 0 0
7/ 0 0

2/ 0 0
/1 0 0

2/ 0 0
/1 0 0

3/ 0 0

6/ 00
/1 0 0
7/ 2 00

/1 0 0
/1 00

2 9 /2 0

29 / 20

2 1 /2 0
25 20

2 6 /2 0

20
10 2 0

10 0
21 20

20 / 20

24 20
11 2 0
1 5 / 20

17 20

13 0

1 8 / 20
25 20

14 20
4/ /2 0

This would offer the better price alignment to the

/2
/2
30 / 2

/2

/2

/2
23 2/ 2

/2

/2

/2
1 5 /2

2 0 /2

12 /2

/
/
/

/
/
7

6
0
1

0
1
1/

D ATE

market because arbitragers would be better off

It may be argued that because of the arbitragers
in the system, price of stock should go up and al-
most touch the tender offer price. But it does not
happen practically because of the risk involved in
the arbitrage transaction. Strictly speaking, it is not
a pure arbitrage deal where the profits are locked
out-rightly. It is a risk arbitrage deal because
arbitragers do carry the risk of non-acceptance
in terms of not carrying the risk of non-acceptance
or part acceptance of their shares by the company.
This would happen because they would buy stocks
and the corresponding number of put warrants
and then tender them to the company in exact
numbers. Investors also would be able to extract
the best from the offer without leaving any val-
ues on the street.

SEBI BULLETIN ■ VOL. 1 ■ PART 3 ■ MARCH 2003 ■ 17

 14
Immediate Availability of Funds
Another advantage to the investors in the put op-
tion/warrant approach would be the immediate
availability of the funds, which may be done by
making these put options American type i.e. exer-
cisable any time till the maturity. In this case, there
would be no requirement for the company to wait
for releasing the payment till the closure of the
offer, which was mainly for the decision of the
acceptance process, in case of over subscription
of the offer. It may be noted that there would not
be any issue of the over subscription as the shares
would always accompany the already issued put
warrants. Thus, the investors would be benefited
by the early payment on their tenders in compari-
son to the fixed price tender offer otherwise.
Cost Savings
In a typical buy back offer, the number of shares
to be accepted by the company are fixed and dis-
closed in the offer document. If the shares ten-
dered by the public are more than the number
outlined, as stipulated in the regulations, the com-
pany needs to accept the shares on pro rata basis.
These pro rata calculations often suggest the ac-
ceptance of odd number of shares.
For electronic holding, there is no issue if the odd
number of shares is returned to the investors as
any number of shares may be traded in the mar-
ket. But for the holders of the physical shares the
companies have to issue fresh share certificates
with smaller denominations. This entails cost and
at the same time puts these physical share hold-
ers into trouble because of their odd lot holdings.
In the proposed structure of the warrants, this
problem would be solved to a large extent as the
investors may either sell their warrants without
selling the shares or buy the warrants to cover up
for the deficiencies without losing the values. For
instance, investor holding the 100 shares and 20
warrants may simply sell the 20 warrants at the
market rate or buy the further 80 warrants from
the market and tender his whole 100 shares in the
buyback/tender offer.
SEBI BULLETIN ■ VOL. 1
SECURITIES AND EXCHANGE BOARD OF INDIA
Flexibility to Investors
In the proposed structure, an investor already
knows that to be eligible to tender a specific num-
ber of shares, he needs the corresponding num-
ber of warrants. So, he may buy the additionally
required number of warrants from the market, if
he desires to tender all the shares held by him.
Alternatively, he may decide to sell his rights (war-
rants) in the market and continue with the shares
without loosing the values occurring to him by the
company’s buy back move or he may partially sell
the warrants and partly exercise them. Therefore,
this proposal would offer the tremendous flexibil-
ity to the investors in terms of the operational
dimension.
Other Nuances
In case of buy back of shares, if promoters don’t
intend to participate in the buy back process, is-
suance of the put warrants to the investors can be
increased accordingly. Similarly, in case of the
takeovers, the issuance of the put warrants to the
investors would increase to the extent of the eq-
uity stake with the acquirers. Further, investors
may always be allowed to apply for the shares
without the put warrants but those shares would
be accepted only when some investors don’t exer-
cise their rights. This acceptance of the additional
shares would take place on proportionate basis.
It is envisaged that a company has two sets of in-
vestors - investors with depository account and
investors having shares in physical form. For those,
who have demat holding, company may directly
credit the warrants in their depository accounts
and inform them along with letter of offer. For
investors holding the shares in physical form, war-
rants may be dispatched along with the letter of
offer. While tendering the shares, demat account
holders may directly transfer the shares along with
the required number of put options to the demat
account opened by the company for the buy back
purpose and physical documents may be sent to
the merchant banker/registrar of the company.
The company would have to list the warrants on
stock exchanges. This will be the additional cost
to the company.
■ PART 3 ■ MARCH 2003 ■ 18
 ARTICLES
End Note
It can be easily discerned from the above that put
warrants approach to the fixed price buyback/
takeover offers imparts advantages of better val-
ues distribution among the investors, convenience
and better consistency in the stock prices, over the
prevailing practice. Therefore, it would be inter-
SEBI BULLETIN ■ VOL. 1
15
esting to explore this put option route for the fixed
price buyback/takeover offers. Put warrants are
widely acknowledged as the instruments for the
fixed price buy back/takeover offers in the devel-
oped markets like U.S. and U.K. Indeed, sizable
portion of the fixed price buy back takes place in
these markets through the put warrants.
■■
■ PART 3 ■ MARCH 2003 ■ 19
 16
Stock Market Development and Economic
Growth: The Evidence from India
SARAT MALIK* 
A
growing literature suggests that stock mar-
kets provide impetus for economic growth.
A well-functioning stock market helps the
growth process in an economy by increasing sav-
ings, making increased savings available for invest-
ment, allocating investment resources efficiently
and ensuring better utilisation of the existing re-
sources. It encourages savings by providing the
households with an additional instrument which
may better meet their risk-return preferences and
liquidity needs. It channelises savings to firm in-
vestments by allowing the investors to trade in
ownership of funds to meet the liquidity needs. It
allocates resources to most productive investment
and hence helps to generate higher returns from
the same stock of investments. It monitors the use
of resources constantly and effectively and
thereby provides incentives to managers of re-
sources to make best use. The prime objective of
this paper is to assess if the stock markets in India
are importantly linked to economic growth.
Theoretical Framework
The early authors of economics used the subject
of stock markets as the case examples in their dis-
cussions of competitive market conditions. Sub-
sequently, the subject was expanded to the role of
prices in the stock market in allocation of re-
sources by providing incentives for accumulation
and employment of capital. Specifically, Green-
wood and Smith (1996) indicated that large stock
markets can lower the cost of mobilising savings
and thereby facilitate investment in most produc-
tive technologies. Bencivenga, Smith and Starr
(1996) and Levine (1991) argue that stock market
liquidity - the ability to trade equity easily - is im-
portant for growth. Moreover, many profitable
*
Assistant Director, SEBI. The views expressed and the approach suggested in this paper are of the author and not necessarily of SEBI.
SEBI BULLETIN
SECURITIES AND EXCHANGE BOARD OF INDIA
investments require long-
term capital and the sav-
ers do not wish to relin-
quish their control of sav-
ings for long period. In
such case liquid equity
markets ease this tension by providing an asset to
save that can be quickly and inexpensively
encashed. On the other hand, the firms have the
permanent access to capital raised through equity
issues. Also, Kyle (1984) and Holmstrom and Tirole
(1995) argue that liquid stock markets can increase
incentives to get information about firms and im-
prove corporate governance. Then, Obstfeld (1994)
shows that international risk sharing through in-
ternationally integrated stock markets improves
resource allocation and can accelerate the rate of
economic growth. Levine and Zervos (1996) ex-
amine the empirical relationship between stock
market development and long-run growth and
found that a strong/robust relationship exists be-
tween stock market development and economic
growth. Levine (1991) and Bencivenga et al (1991)
derive models where more liquid stock markets
reduce the disincentives to investing in long dura-
tion projects because investors can easily sell their
stake in the project if they need their savings be-
fore the project matures. So enhanced liquidity
facilitates investment in longer-run, higher return
projects that boost productivity growth. Similarly,
Michael B. Devereux and Gregor W. Smith (1994)
and Maurice Obstfeld (1994) show that greater
international risk sharing through internationally
integrated stock markets induces a portfolio shift
from safe, low-return investments to high return
investments, thereby accelerating productivity
growth. Levine and Zervos (1998) in their study
■ VOL. 1 ■ PART 3 ■ MARCH 2003 ■ 20
 ARTICLES
found stock market liquidity is positively and sig-
nificantly correlated with current and future rates
of economic growth, capital accumulation and
productivity growth. Raymond Atje and Jovanovic
(1993) in their cross-country study of stock mar-
kets and economic growth found that there exists
a significant correlation between growth over the
period 1980-1988 and the value of stock market
trading for 40 countries. Rajan and Zingales (1998)
show that in countries with well-developed finan-
cial systems and industries that are naturally
heavy users of external finance grow relatively
faster than other industries. World Bank research
group in their studies with cross-country data also
found that stock market is positively and robustly
associated with long-run growth. However, Singh
(1997) emphasized that stock market develop-
ments after financial liberalisation are very un-
likely to help on achieving rapid industrialisation
and faster long-term growth in most developing
countries. He attributes the reasons for inherent
volatility and ambiguousness of stock market pric-
ing process as guide to inefficient investment allo-
cation. These studies indicate a relationship be-
tween stock market and economic growth. The
present study attempts to find out whether such
a relationship exists in Indian context.
Analytical Framework
In order to examine empirical relationship be-
tween stock market development and economic
growth, this study uses three different stock mar-
ket indicators and three different growth variables,
as explained below:
Stock Market Development Indicators
i. Market Size: The ratio of market capitalisation
divided by Gross Domestic Product (GDP) is
used to measure size of the stock market.
Market capitalisation equals the total market
value of all listed shares. In terms of economic
significance, the assumption underlining the
use of this variable as an indicator of stock
market development is that the size of the
stock market is positively correlated with the
ability to mobilise capital and diversify risk.
SEBI BULLETIN ■ VOL. 1
17
ii. Stock Market Liquidity: Liquidity refers to the
facilities for investors to alter their portfolios
quickly and cheaply. It makes the investment
less risky and facilitates more profitable in-
vestment in the longer run. This liquidity
measure complements the measure of stock
market size since markets may be large but
inactive. Liquidity may influence growth by
easing investment in large, long-term projects
by promoting acquisition of information
about firms and managers. The variation in
the degree of liquidity affect the price discov-
ery process and deficiency of the market. For
simplicity, the liquidity of the market is the
situation in which large trade in shares can
be transacted without having any material
impact on the prices of shares. A comprehen-
sive measure of liquidity would quantify all
the costs associated with the trading of shares
including the time-cost and the uncertainty
of finding the counterparties and settlement
of trades.
The liquidity is measured in terms of traded value
ratio and turnover ratio. The traded value ratio
indicates volume of trading in relation to the size
of the economy whereas turnover ratio shows
trading in relation to the size of the market. Traded
value ratio is defined as the total value of traded
shares in the stock market divided by GDP. An-
other measure of liquidity is the turnover ratio
which equals to the value of total shares traded
divided by market capitalisation. A small but ac-
tive market will have small market capitalisation
but high turnover ratio which complements total
traded value ratio. Although total traded value
ratio captures trading compared with the size of
the economy, turnover ratio measures the trad-
ing related to the size of the stock market. To put
it differently, a small liquid market will have a bet-
ter turnover ratio but the small total traded value
ratio. Thus, by incorporating information on mar-
ket capitalisation, total traded value ratio and turn-
over ratio, we can provide a more comprehensive
picture of stock market development.
■ PART 3 ■ MARCH 2003 ■ 21
 18
Growth Variables
(i) Bank Credit : In macro-economic theory, the
increase in the amount of credit meant for invest-
ment purposes creates more output. This also
leads to monetary expansion in the economy. But
the impact on prices of such expansion is
neutralised by the increase in overall output which
the credit expansion helps to generate. This de-
pends on the elasticity of output with respect to
credit and elasticity of price with respect to money
as well as output. Again these elasticities them-
selves depend upon the structure of production
and the flexibility of supply responses.
(ii) Money Supply : As per general practice, the
broad money (M3) is considered as a measure of
liquidity helping all economic activities for deve-
lopment and growth. The total money supply in-
fluences the economic system through the provi-
sion of credit availability under transmission
mechanism.The use of M3 as an indirect growth
variable in this model is based on the argument of
the relationship between money, output and prices.
The demand function of real money balances runs
as follows:
M/P = f(Y r, i)
Where M stands for nominal money held by the
public, P for price level, Y r for real income and
i for interest rate. It is possible to build into such a
formulation the lagged impact of the factors in-
fluencing money holding.
The observed relationships between money, out-
put and prices in India suggest a basis for deter-
mining the range of targets for monetary growth.
The level of M3 is determined on the basis of de-
sired growth in output, the tolerable level of rate
of increase in prices and the expected income elas-
ticity of demand for money. The rate of monetary
expansion varies from year to year depending
upon the anticipated rate of growth in real out-
put, emerging trends in economy like trends in
agricultural output, industrial output, infrastruc-
ture and prices. The growth is dependent on the
availability of credit based on the interest rate
determined by level of M3 in the economy. It is
often argued that curtailing money supply growth
might adversely affect output. The creation of
SEBI BULLETIN ■ VOL. 1
SECURITIES AND EXCHANGE BOARD OF INDIA
output itself is associated with the growth in credit
and money supply and it is hard to determine the
precise rate of growth in credit and money supply
which permits desired output creation without
affecting price stability. These arguments lead to
policy prescriptions in the area of removing sup-
ply bottlenecks (which might well result in addi-
tional credit creation and hence growth in money
supply) on the one hand and demand management
on the other in order to contain rise in general price
level while attempting to achieve the desired level
of growth in output.
To test the proposition of a possible link between
money supply and stock market, M3 has been
taken as one of the growth measures having an
indirect impact via channels of transmission in this
model.
(iii) Index of Industrial Productions: A wide spread
literature examines the role of equity financing to
corporates investment and its contribution in in-
dustrial development. In developing countries,
corporates/companies in the industrial sector are
moving towards equity financing rather than debt
financing because the cost of equity capital is more
favourable than that of debt financing. Hence,
Index of Industrial Production (IIP) is used as a
growth variable in place of GDP. It measures the
corporate performance in terms of their growth
and how the stock market development has been
able to meet financial needs in India.
Data and Methodology
Monthly data mainly secondary in nature are used
for each variable from the period April, 1993 to
March, 2002. The starting month and year are se-
lected taking into account the availability of
monthly data in the stock market. Stock market
data are directly taken from the Stock Exchange,
Mumbai as it represents the Indian stock market
in totality during the period of our analysis. The
data relating macro-economic growth variables
have been collected from different issues of RBI
monthly bulletin and other RBI publications. For
the estimation of market capitalisation ratio and
the value traded ratio on monthly basis, the data
on IIP have been used as a proxy for the GDP as
the later is not available on monthly basis.
■ PART 3 ■ MARCH 2003 ■ 22
 ARTICLES
Before examining the casual link between stock
market indicators and growth variables, the cor-
relation between those variables have been exam-
ined for testing the casual link. In studying the
casual link between different variables, recent eco-
nomic techniques of co-integration and Granger’s
Block Causality in a VaR framework have been
used. The co-integration of variables under con-
sideration suggests the existence of a long run re-
lationship between them. This means they cannot
drip further away from each other arbitrarily and
any deviations of the variables from a long-run
equilibrium path will be corrected. Generally
speaking, the co-integration analysis involves two
steps viz. integration test and co-integration test.
The first step in testing co-integration is to estab-
lish the order of the integration or the stationary
properties of the variables concerned. It may be
mentioned that the variable is set to be integrated
of the order d, written I(d) if it requires differencing
d times to achieve stationarity. As the levels of most
variables are widely noted to be I(1), the integra-
tion tests focus on whether the variables contain
a unit root which can be achieved by standard
Dickey-Fuller (DF) and Augmented Dickey-Fuller
(ADF) test.
Once the order of integration is established for
each variable, the second step applies co-integra-
tion tests to examine whether the integrated se-
ries share a long-run equilibrium relationship.
Briefly, the variables such as IIP and M3 are set to
be co-integrated, if they are nonstationary, inte-
grated of the same order and get their linear com-
bination is stationary.
Unit Root Tests: Some Explanations
Time series theories starts by considering the data
generating mechanism, which should be able to
generate all the statistical properties of the series,
or at least the conditional mean, variance and tem-
poral autocorrelations, i.e. “linear properties” of the
series, conditional upon past data. A series is sta-
tionary, called I(0), denoting “integrated of zero”,
when the linear properties exist and are time-in-
variant. Some series needs to be differenced once
to achieve these properties and these are called
integrated of order one, denoted I(1). More gener-
SEBI BULLETIN ■ VOL. 1
19
ally, if a series needs differencing d times to be-
come I(0), it is called integrated of order d, denoted
I(d).There are many substantial differences be-
tween two series, I(0) and I(1). An I(0) series has a
mean and there is a tendency for the series to re-
turn to the mean, so that it tends to fluctuate
around the mean, crossing that value frequently
and with rare extensive excursions [Granger
(1986)]. In an I(0) series autocorrelations decline
rapidly as lag increases. On the other hand, an I(1)
process without drift is relatively smooth, deviates
widely and only rarely returns to an earlier value.
For testing co-integration, it is necessary to ascer-
tain that the concerned series are not I(0) and the
order of the concerned series should be the same.
To verify this, the Dickey-Fuller (DF) and the Aug-
mented Dickey-Fuller (ADF) unit root tests are
employed.
DF and ADF Tests
The Dickey-Fuller unit root test (without trend)
procedure requires estimation of the following
equation:
p
∆Xt = µt + βXt-1 +Σ γj ∆Xt–j + et …(A.1)
j =1
where, p is selected to be large enough to ensure
that the residual et is empirical white noise, ∆ dif-
ference operator, β and γ are parameters. The
“test-statistic” is the ratio of β to its calculated stan-
dard error obtained from an ordinary least squares
(OLS) regression. The null hypothesis is: Xt is I(1)
or integrated of order one. This is rejected if the
test-statistic of β is negative and significantly dif-
ferent from zero. It should be noted that the test-
statistic does not have the usual t-distribution. The
Tables on significance levels have been provided
by Dickey and Fuller (1979). This test procedure
is also known as the ADF test. The DF test forms a
special case of ADF test when the summation part
in the right hand side of equation (A.1) deleted or
when γj = 0.
Co-integration Test in a Multivariate System
Since the present study deals with multivariate
regression analysis, the co-integration testing pro-
cedure suggested by Johansen (1988), and
■ PART 3 ■ MARCH 2003 ■ 23
 20 SECURITIES AND EXCHANGE BOARD OF INDIA

Johansen and Juselius (1992) is appropriate. If we the variables in Zt are I(0). If the rank of Π is zero
have a vector zt of ‘n’ potentially endogenous vari- then there are no co-integration relationships. If Π
ables, then it is possible to specify the following has reduced rank, i.e., r ≤ (n-1), then co-integrating
vector auto regression (VaR) mode involving up vectors are also present. In the testing procedure
to k-lags of Zt: the hypotheses are:
Zt = A1Zt–1 +. . .+AkZt–k + ut …(A.2) H0: r=0 (no co-integrating vectors present), and the
alternative,
ut ≈ IN (0, Σ)
H 1: r ≤ (n-1) [(n-1) co-integrating vectors are
where Zt is (n × 1) and each of Ai is an (n× n) matrix
present].
of parameters.
The Johansen estimation method is based on the Empirical Results
error-correction representation of the VaR(k) Correlations
model with Gaussian errors. Equation (A.2) can Table 1 presents the correlations which are worth
be reformulated into a vector error-correction highlighting. The index of industrial production
(VECM) from: (IIP), bank credit (BCD) and money supply (M3)
∆Zt = T1 ∆Zt–1 +. . .+Tk–1∆Zt–k +1+ ΠZt–k +BXt +ut …(A.3) are highly correlated. For further analysis three
growth variables [(market capitalisation ratio
where, Zt is an n × 1 vector of I(1) variables, Xt is
(MCAPR), value traded ratio (VTR) and turnover
an s × 1 vector of I(0) variables, T1, T2, ...Tk-1, Π are
ratio (TOR)] are used independently with the three
n × n matrices of unknown parameters, B is an n × s
stock market indicators. All the stock markets vari-
matrix. The Ti and Π contain information of the
ables are positively correlated with the growth
short and long-run adjustment to changes in Zt.
variables.
The Johansen Maximum Likelihood (ML) proce-
dure estimates equation (A.3) subject to the hy- Table 1: Correlation Test
pothesis that Π has a reduced rank, r<n. Correlation IIP BCD M3 MCAPR VTR TOR
The matrix Π can also be expressed as: IIP 1.00
Π = αβ' …(A.4) BCD 0.97 1.00

where, α represents the speed of adjustment to M3 0.96 0.99 1.00

disequilibrium, while β is a matrix of long-run co- MCAPR 0.37 0.31 0.37 1.00
efficients such that the term β' Zt-k embedded in VTR 0.64 0.64 0.66 0.67 1.00
(A.3) represents up to (n-1) co-integration relation- TOR 0.61 0.60 0.61 0.63 0.99 1.00
ships in the multivariate model which ensure that
the Zt converge to their long-run steady-state so- Dynamic Analysis in a co-integrated VaR frame-
lutions. In this approach Zt is assumed to be a vec- work
tor of nonstationary I(1) variables, then all The DF and ADF tests results for the six series are
the terms in (A.3) which involve ∆Zt-i are I(0) while presented in Table 2 and Table 3. As may be seen
ΠZt-k must also be stationary for ut ~ I(0) to be that the test of unit roots shown in Table 3 as per
white-noise. the methodology indicated earlier shows that the
In the Johansen-Juselius (JJ) method the idea of series IIP, BCD, MCAP, TOR and VTR contain one
co-integration is to search for linear combinations unit roots. They are all non-stationary in levels at
of the Zt that are I(0). In other words, testing for I (1) and MCAP is only stationary at I(0). However,
co-integration amounts to a consideration of the all the variables are stationary as per the DF Tests
rank of Π, i.e., finding the number of r linearly in- after first differences and near stationary as per
dependent columns in Π. If Π has full rank, i.e., if the ADF Tests. Thus, it is concluded that all vari-
there are r =n linearly independent columns then ables are stationary at first differences (Table 3).

SEBI BULLETIN ■ VOL. 1 ■ PART 3 ■ MARCH 2003 ■ 24

 ARTICLES 21
Table 2: Tests for Stationarity-Dickey Fuller (DF) there is a long-run relationship between each
and Augmented Dickey Fuller (ADF) Tests at Log growth variable with the three stock market indi-
-Levels cators and all growth variables with all stock mar-
ket indicators. The results of Johansen maximum
Variable DF-Statistic ADF-Statistic (lag)
likelihood co-integration test for the IIP and three
Without With Without With
Trend Trend Trend Trend
stock market development indicator variables are
given in Table 4. The order of auto regressions are
LIIP  -1.84 -5.17 -2.85 (12) -1.82 (12)
alternatively sets 2, 3 and 4. The results indicate
LM3  -0.33 -3.3 -0.92 (9)  -1.59 (8)
that the null hypothesis of no-integration is re-
LBCD  -0.75 -3.32  -1.26 (12)  -3.01 (1) jected at 95% critical value. At this point it is con-
LMCAP  -2.89 -2.86 -3.13 (2) -3.10 (2) cluded that three of four are co-integrating vec-
LTOR  -2.21 -5.54 -1.79 (12) -2.54 (12) tors. Thus the index of industrial production is co-
LVTR  -1.97 -2.41 -1.44 (2) -1.57 (2)
integrated with any of the stock market develop-
ment variables.
Note : The estimated DF and ADF statistic are based on Akaike
Information Criterion (AIC). The 95% critical value for the Table 4 : Co-integration Results of the VaR Model
ADF statistic is -2.89 for the regression without a trend and on Maximum Eigenvalue and Trace of the Sto-
-3.46 for the regression with a trend. chastic Matrix of IIP
Table 3 : Tests for Stationarity-Dickey Fuller (DF) Null Alterna- Maximum 95% critical
and Augmented Dickey Fuller (ADF) Tests at Log tive Eigenvalue value
-First-Differences  R=0 r=1 28.73 28.27
Variable DF-Statistic ADF-Statistic (lag) R=1 r=2 17.42 22.04
Without With Without With R=2 r=3 8.41 15.87
Trend Trend Trend Trend
R=3 r=4 5.27 9.16
LIIP  -14.98  -14.90  -2.48 (12)  -3.08 (12)
Trace of the Stochastic Matrix
LM3  -8.42  -10.14  -0.65 (12)  -3.21 (11)
LBCD  -11.03  -11.13  -2.65 (11) -5.81 (7)
R=0 r≥1 59.84 53.48

LMCAP  -10.48  -10.44 -5.95 (3)   -6.95 (2) R≤1 r≥2 31.11 34.87

LTOR  -9.95  -9.91  -4.39 (8)  -4.22 (7) R≤2 r≥3 13.68 20.18

LVTR -10.09 -10.06 -3.02 (10) -3.07 (10) R≤3 r≥4 5.27 9.16

Note: The estimated DF and ADF statistics are based on Akaike Table 5 : Co-integration Results of the VaR Model
Information Criterion (AIC). The 95% critical value for the on Maximum Eigenvalue and Trace of the Sto-
ADF statistic is -2.89 for the regression without a trend and
chastic Matrix of M3
-3.46 for the regression with a trend.
The number of co-integration factors i.e. number Null Alterna- Maximum 95% critical
tive Eigenvalue value
of long-run relationship is investigated by using
Johansen’s maximum likelihood method. The R=0 r=1 44.83 28.27
Eigen value and trace tests results are summarised R=1 r=2 24.68 22.04
in Tables 4 to 7. An unrestricted VaR model was R=2 r=3 10.18 15.87
estimated using equation for MCAP, TOR, VTR, R=3 r=4 4.25 9.16
M3, BCD and IIP. By using Schwartz Baysian Cri- Trace of the Stochastic Matrix
teria (SBC) the order of VaR model was found to
R=0 r≥1 83.95 53.48
be one. As noted earlier, in an unrestricted VaR
model, the block causality can be examined by the R≤1 r≥2 39.12 34.87
F² test which is equivalent to Granger (1969) Cau- R≤2 r≥3 14.44 20.18
sality. The co-integration test results show that R≤3 r≥4 4.25 9.16

SEBI BULLETIN ■ VOL. 1 ■ PART 3 ■ MARCH 2003 ■ 25

 22 SECURITIES AND EXCHANGE BOARD OF INDIA

Johansen maximum likelihood co- integration test Trace of the Stochastic Matrix
results for money supply (M3) and stock market R=0 r≥1 154.43 102.56
development indicators are given in Table 5. The
R≤1 r≥2 96.80 75.98
results show that the null hypothesis of no inte-
gration at 95% of the critical value and the three R≤2 r≥3 54.88 53.48
stock market indicators are co-integrated with R≤3 r≥4 32.10 34.87
money supply i.e. broad money (M3).
AMEI = All Macro-economic Indicators.
Table 6 indicates the results of Johansen’s maxi-
Table 7 indicates the co-integration results of VaR
mum likelihood co-integration test results for bank
model based on Johansen maximum likelihood co-
credit and three stock market indicators. The re-
integration test results. The order of the auto-re-
sults show that null hypothesis of no co-integra-
gressions are alternatively set to 1, 2 & 3. The re-
tion is rejected at 95% level of significance and
sults indicate that the null hypothesis of no co-in-
there is at least one co-integrating vector. Thus
tegration is rejected at 95% critical value. Thus, it
the bank credit through commercial sectors is co-
is concluded that there are co-integrating vectors
integrated with any of the three stock market de-
and all growth variables like IIP, bank credit,
velopment indicators i.e. market capitalisation ra-
money supply are co-integrated with all stock
tio, value traded ratio and turnover ratio.
market indicators.
Table 6 : Co-integration Results of the VaR Model
on Maximum Eigenvalue and Trace of the Sto- Conclusion
chastic Matrix of BCD The aim of this paper was to examine the rela-
Null Alterna- Maximum 95% critical
tionship between stock markets and economic
tive Eigenvalue value growth in India. The data and the results suggest
R=0 r=1 26.60 28.27
that stock market development remain positively
and significantly correlated with economic growth.
R=1 r=2 24.15 22.04
In this regard, various tests conducted to evalu-
R=2 r=3 13.11 15.87 ate the role that may be played by the stock mar-
R=3 r=4 5.30 9.16 ket development indicators i.e. market capitali-
Trace of the Stochastic Matrix sation, value traded ratio and turnover ratio with
macro-economic growth variables like IIP, M3 and
R=0 r≥1 69.18 53.48
bank credit of the Indian economy found that
R≤1 r≥2 42.57 34.87 there exists a long-term relationship. While exist-
R≤2 r≥3 18.42 20.18 ing studies focused mainly on one way relation-
R≤3 r≥4 5.30 9.16 ship between stock market development and eco-
nomic growth, the present findings extended em-
Table 7 : Co-integration Results of the VaR Model pirical implementation to show the both way
on Maximum Eigenvalue and Trace of the Sto- relationship. The results which are consistent with
chastic Matrix of AMIE theories suggest that there is a relationship be-
Null Alterna- Maximum 95% critical tween stock market development and economic
tive Eigenvalue value growth in India. It is also found that index of in-
R=0 r=1 57.63 40.53
dustrial production and bank credit are signifi-
cantly linked to stock market development indi-
R=1 r=2 41.92 34.40
cators and stock market is an integral part of
R=2 r=3 22.78 28.27 growth process. The empirical extension by this
R=3 r=4 18.37 22.04 paper is important for the policy makers to pre-
dict and plan for the future path of stock market

SEBI BULLETIN ■ VOL. 1 ■ PART 3 ■ MARCH 2003 ■ 26

 ARTICLES
development and also the path of long-run eco-
nomic growth.
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17. World Bank Development Report various issues
(World Bank, Washington, DC.)
■■
■ PART 3 ■ MARCH 2003 ■ 27
 24
Significance of Securities Market in the Growth
of an Economy: An Indian Context
G. N. BAJPAI* 
I
thank the organizers of this programme for
affording me an opportunity to reiterate the
significance of a very vital segment of the
economy, i.e. the securities market.
It is needless to say that the financial markets
(banks and the securities markets) finance eco-
nomic growth. They channelise savings to invest-
ments and thereby decouple these two activities.
As a result, savers and investors are not con-
strained by their individual abilities, but by the
economy’s ability to invest and save respectively,
which inevitably enhances savings and investment
in the economy. To the extent the growth of an
economy depends on the rate of savings and in-
vestment, financial markets promote economic
growth.
The banks and securities markets are two com-
peting mechanisms to channel savings to invest-
ment. The securities markets score over banks in
the allocational efficiency, as it allocates savings
to those investments which have potential to yield
higher returns. This inevitably leads to higher re-
turns to savers on their savings and higher pro-
ductivity on investments to enterprises. Hence to
the extent economic growth depends on the rate
of return on investments, securities market pro-
motes economic growth.
With this brief background, I propose to talk first
about functions of the securities market, then its
role and importance in the growth of an economy,
then how a liberalized securities market promotes
economic growth, then talk about its significance
in the Indian economy and finally, significance of
the market in the growth of Indian economy.
*
S. D. Gupte Memorial Lecture delivered by Shri G. N. Bajpai, Chairman, SEBI at Mumbai on March 13, 2003. This lecture heavily borrows
from the Indian Securities Market Review, 2002, a publication of NSE and an article “Securities Market Reforms in a Developing Country”
by M. S. Sahoo, published in Chartered Secretary, November 1997.
SEBI BULLETIN
SECURITIES AND EXCHANGE BOARD OF INDIA
Speeches
Functions of Securities
Market
The securities market al-
lows people to do more
with their savings than
they would otherwise. It
also allows people to do more with their ideas and
talents than would otherwise be possible. The
people’s savings are matched with the best ideas
and talents in the economy. Stated formally, the
securities market provides a linkage between the
savings and the preferred investment across the
entities, time and space. It mobilizes savings and
channelises them through securities into preferred
enterprises.
The securities market enables all individuals, irre-
spective of their means, to share the increased
wealth provided by competitive enterprises. The
securities market allows individuals who can not
carry an activity in its entirety within their re-
sources to invest whatever is individually possible
and preferred in that activity carried on by an
enterprise. Conversely, individuals who can not
begin an enterprise they like can attract enough
investment from others to make a start and con-
tinue to progress and prosper. In either case, indi-
viduals who contribute to the investment share
the fruits.
The securities market also provides a market place
for purchase and sale of securities and thereby
ensures transferability of securities, which is the
basis for the joint stock enterprise system. The li-
quidity available to investors does not inconve-
nience the enterprises that originally issued the
■ VOL. 1 ■ PART 3 ■ MARCH 2003 ■ 28
 SPEECHES
securities to raise funds. The existence of the se-
curities market makes it possible to satisfy simul-
taneously the needs of the enterprises for capital
and of investors for liquidity.
The liquidity the market confers and the yield
promised or anticipated on security encourages
people to make additional savings out of current
income. In the absence of the securities market,
the additional savings would have been consumed
otherwise. Thus the provision of securities mar-
ket results in net savings.
The securities market enables a person to allocate
his savings among a number of investments. This
helps him to diversify risks among many enter-
prises, which increases the likelihood of long-term
overall gains.
Securities Market and Economic Growth
I strongly believe that a well functioning securi-
ties market is conducive to sustained economic
growth. There have a number of studies, starting
from World Bank and IMF to various scholars,
which have established robust relationship not
only one way, but also the both ways, between the
development in the securities market and the eco-
nomic growth. An important study by Ross Levine
and Sara Zervos (1996) finds that the stock mar-
ket development is highly significant statistically
in forecasting future growth of per capita GDP.
Their regressions forecast that if Mexico or Brazil
were to obtain stock markets as advanced as
Malaysia, then they might obtain an additional per
capita GDP growth per year of 1.6%. This happens,
as market gets disciplined/developed/efficient, it
avoids the allocation of scarce savings to low yield-
ing enterprises and forces the enterprises to focus
on their performance which is being continuously
evaluated through share prices in the market and
which faces the threat of takeover. Thus securi-
ties market converts a given stock of investible
resources to a larger flow of goods and services.
The securities market fosters economic growth to
the extent that it—(a) augments the quantities of
real savings and capital formation from any given
level of national income, (b) increases net capital
SEBI BULLETIN ■ VOL. 1
25
inflow from abroad, (c) raises the productivity of
investment by improving allocation of investible
funds, and (d) reduces the cost of capital.
It is reasonable to expect savings and capital ac-
cumulation and formation to respond favourably
to developments in securities market. The provi-
sion of even simple securities decouples individual
acts of saving from those of investment over both
time and space and thus allows savings to occur
without the need for a concomitant act of invest-
ment. If economic units rely entirely on self-fi-
nance, investment is constrained in two ways: by
the ability and willingness of any unit to save, and
by its ability and willingness to invest. The unequal
distribution of entrepreneurial talents and risk
taking proclivities in any economy means that at
one extreme there are some whose investment
plans may be frustrated for want of enough sav-
ings, while at the other end, there are those who
do not need to consume all their incomes but who
are too inert to save or too cautious to invest the
surplus productively. For the economy as a whole,
productive investment may thus fall short of its
potential level. In these circumstances, the securi-
ties market provides a bridge between ultimate
savers and ultimate investors and creates the op-
portunity to put the savings of the cautious at the
disposal of the enterprising, thus promising to raise
the total level of investment and hence of growth.
The indivisibility or lumpiness of many potentially
profitable but large investments reinforces this
argument. These are commonly beyond the fi-
nancing capacity of any single economic unit but
may be supported if the investor can gather and
combine the savings of many. Moreover, the avail-
ability of yield bearing securities makes present
consumption more expensive relative to future
consumption and, therefore, people might be in-
duced to consume less today. The composition of
savings may also change with fewer saving being
held in the form of idle money or unproductive
durable assets, simply because more divisible and
liquid assets are available.
The securities market facilitates the internationali-
sation of an economy by linking it with the rest of
■ PART 3 ■ MARCH 2003 ■ 29
 26
the world. This linkage assists through the inflow
of capital in the form of portfolio investment.
Moreover, a strong domestic stock market perfor-
mance forms the basis for well performing domes-
tic corporate to raise capital in the international
market. This implies that the domestic economy
is opened up to international competitive pres-
sures, which help to raise efficiency. It is also very
likely that existence of a domestic securities mar-
ket will deter capital outflow by providing attrac-
tive investment opportunities within domestic
economy.
Any financial development that causes investment
alternatives to be compared with one another pro-
duces allocational improvement over a system of
segregated investment opportunities. The benefits
of improved investment allocation is such that
McKinnon defines economic development as
reduction of the great dispersion in social rate of
return to existing and new investments under
domestic entrepreneurial control. Instead of
emphasising scarcity of capital, he focuses on the
extraordinary distortions commonly found in the
domestic securities markets of the developing
countries. The distortions in the real sectors such
as monopoly power, tariff protection, import quo-
tas, credit rationing and so forth add salt to in-
jury. In the face of great discrepancies in rate of
return, the accumulation of capital does not con-
tribute much to development. A developed secu-
rities market successfully monitors the efficiency
with which the existing capital stock is deployed
and thereby significantly increases the average
return.
In as much as the securities market enlarges the
financial sector, promoting additional and more
sophisticated financing, it increases opportunities
for specialisation, division of labour and reductions
in costs in financial activities. The securities mar-
ket and its institutions help the user in many ways
to reduce the cost of capital. They provide a con-
venient market place to which investors and issu-
ers of securities go and thereby avoid the need to
search a suitable counterpart. The market pro-
vides standardised products and thereby cuts the
SEBI BULLETIN ■ VOL. 1
SECURITIES AND EXCHANGE BOARD OF INDIA
information costs associated with individual in-
struments. The market institutions specialise and
operate on large scale which cuts costs through
the use of tested procedures and routines.
There are also other developmental benefits asso-
ciated with the existence of a securities market.
First, the securities market provides a fast-rate
breeding ground for the skills and judgement
needed for entrepreneurship, risk bearing, port-
folio selection and management. Second, an ac-
tive securities market serves as an ‘engine’ of gen-
eral financial development and may, in particu-
lar, accelerate the integration of informal finan-
cial systems with the institutional financial sector.
Securities directly displace traditional assets such
as gold and stocks of produce or, indirectly, may
provide portfolio assets for unit trusts, pension
funds and similar FIs that raise savings from the
traditional sector. Third, the existence of securi-
ties market enhances the scope, and provides in-
stitutional mechanisms, for the operation of mon-
etary and financial policy.
While the above indicate that the securities mar-
ket promotes economic growth, it is not one way
relation. The economic growth also promotes se-
curities market, which I am not discussing now.
Liberalised Securities Market and Economic
Growth
Now let me explain how a liberalized securities
market helps promote economic growth. The more
liberalized a securities market is, the better is its
impact on economic growth. Interventions in the
securities market were originally designed to help
governments expropriate much of the seigniorage
and control and direct the flow of funds for
favoured uses. These helped governments to tap
savings on a low or even no-cost basis. In some
economies governments used to allocate funds
from the securities market to competing enter-
prises and decide the terms of allocation. The re-
sult was channelisation of resources to favoured
uses rather than sound projects. In such circum-
stances accumulation of capital per se meant little,
where rate of return on some investments were
■ PART 3 ■ MARCH 2003 ■ 30
 SPEECHES
negative while extremely remunerative invest-
ment opportunities were foregone. This kept the
average rate of return from investment lower than
it would otherwise have been and, given the cost
of savings, the resulting investment was less than
optimum. This led mainstream development
economists to argue that liberalization of securi-
ties market is the road to higher levels of domes-
tic savings/investment and more efficient alloca-
tion of capital.
The implication of intervention is illustrated in fig-
ure 1. The vertical axis represents cost of capital
and rate of return on investment and the horizon-
tal axis represents the amount of capital raised
from the securities market. With intervention, the
demand for investment is represented by DdD,
which indicates lower average rate of return cor-
responding to sub-optimal resource allocation. As
the level of investment increases to OD, the maxi-
mum permitted by the authorities, the average
rate of return decreases as relatively less remu-
nerative investments are approved. SS represents
the supply of capital. This results in an investment
of K. If, however, intervention is withdrawn, rate
of return will go up causing a shift in demand for
investment schedule to D1D1, which will be down-
ward sloping throughout. This would result in
higher investment and consequently income which
would shift supply schedule of capital to S1S1. The
investment would further increase to K* and rate
of return would improve to r*. Rate of return im-
proves because removal of intervention ratios out
low yielding investments. As the cost of capital goes
up, the entrepreneurs are likely to switch to less
capital-intensive technologies. Such technologies
may not only raise the average productivity of
capital, but also represent appropriate technology
provided by relative availability and cost of labour
and capital in the economy. Letting rate of return
be determined by the market mechanism would
reduce or even eliminate the costs involved in
credit rationing arrangements and thereby en-
hance the efficiency of the economy as a whole.
High rate of return would stimulate demand for
financial assets and expand financial sector.
SEBI BULLETIN ■ VOL. 1
27
ROR
D1
and
Cost of S
D
capital
S1
d
d
r’
SS S1
D1
K
Investment
O D K’
Figure 1 : Effect of liberalisation of Securities Market
One of the bitter fruits of intervention has been
the shrinkage of the securities market. When sub-
ject to effective expropriation through suppressed
return on investment, people naturally seek a
proper reward elsewhere, either through capital
flight, through a retreat to underground or
through the hoarding of goods. People keep their
savings out of the markets. The underground sec-
tor allocates the resources, but relatively ineffi-
ciently. Another major consequence has been in-
sulation of developing countries from international
capital markets. The domestic market is shielded
from competition.
Misallocation of resources can result because of
distorting interventions or the presence of mar-
ket failure either in the goods market or in the
securities market, which are interlinked. Improve-
ment in allocation efficiency, therefore, requires
removal of distortions from both the markets.
Significance in Indian Economy
Three main sets of entities depend on securities
market. While the corporates and governments
raise resources from the securities market to meet
their obligations, the households invest their sav-
ings in the securities. I will now dish out a few sta-
tistics, mostly taken from the Indian Securities
Market Review, a publication of the National Stock
Exchange, to indicate the level of significance.
While corporate sector and governments together
■ PART 3 ■ MARCH 2003 ■ 31
 28 SECURITIES AND EXCHANGE BOARD OF INDIA

raised a total of Rs. 226,911 crore from the securi- Year Share (%) of Securities Market in
ties market during 2001-02, there are about 20 External Fiscal Deficit Fiscal Deficit Financial
million investors who have invested in the securi- Finance of Central of State Savings
ties. Tables 1 and 2 indicate the significance of the of Corpo- Government Government of House-
rates holds
securities market in Indian economy.
1999-00 33.58 67.1 13.9 7.3
Table 1 : Dependence on Securities Market
2000-01 31.39 61.4 13.8 4.3
Year Share (%) of Securities Market in
2001-02 NA 69.4 15.2 NA
External Fiscal Deficit Fiscal Deficit Financial
Finance of Central of State Savings Source : Economic Intelligence Service-Corporate Sector,
of Corpo- Government Government of House- CMIE & RBI (Copies from Indian Securities Market Review,
rates holds a publication of NSEIL).
1990-91 19.35 17.9 13.6 14.4 The Indian economy witnessed a descent growth
1991-92 19.17 20.7 17.5 22.9 of 6% per year in 1990s against euphemistically
1992-93 33.38 9.2 16.8 17.2 described as Hindu Growth Rate of 3.5% over pre-
1993-94 53.23 48.0 17.6 14.0 ceding four decades. This was possible by contri-
butions mostly by the organised secondary and
1994-95 44.99 35.2 14.7 12.1
tertiary sectors (industry and service). The secu-
1995-96 21.67 54.9 18.7 7.7
rities market helped these organized sectors, cor-
1996-97 22.12 30.0 17.5 6.9 porate and government, to raise resources to
1997-98 28.16 36.5 16.5 4.5 realise a growth rate of 6%. Of late the activity in
1998-99 27.05 60.9 14.1 4.2 the securities market has slowed down, so also the
level of activity in the economy.
Table 2 : Resource Mobilisation from the Primary Market
(Rs. crore)
Issues 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000- 01 2001-02

Corporate Securities 14,219 16,366 23,537 44,498 48,084 36,689 37,147 42,125 60,192 72,450 78,396 74,403

Domestic Issues 14,219 16,366 23,286 37,044 41,974 36,193 33,872 37,738 59,044 68,963 74,199 72,061

Non-Govt. Public
Companies 4,312 6,193 19,803 19,330 26,417 16,075 10,410 3,138 5,013 5,153 4,890 5,692

PSU Bonds 5,663 5,710 1,062 5,586 3,070 2,292 3,394 2,982 - - - —

Govt. Companies - - 430 819 888 1,000 650 43 - - - 350

Banks & FIs - - 356 3,843 425 3,465 4,352 1,476 4,352 2,551 1,472 1,070

Private Placement 4,244 4,463 1,635 7,466 11,174 13,361 15,066 30,099 49,679 61,259 67,836 64,950

Euro Issues - - 702 7,898 6,743 1,297 5,594 4,009 1,148 3,487 4,197 2,342

Government Securities 11,558 12,284 17,690 54,533 43,231 46,783 42,688 67,386 106,067 113,336 128,483 152,508

Central Government 8,989 8,919 13,885 50,388 38,108 40,509 36,152 59,637 93,953 99,630 115,183 133,801

State Governments 2,569 3,364 3,805 4,145 5,123 6,274 6,536 7,749 12,114 13,706 13,300 18,707

Total 25,777 28,650 41,227 99,031 91,315 83,472 79,835 109,511 166,259 185,786 206,879 226,911

Source: RBI. (Copied from Indian Securities Market Review,

rather than depending on loans from FIs/banks.
a publication of NSEIL)
The corporate sector is increasingly depending on
Corporate Sector: The 1990s witnessed emergence external sources for meeting its funding require-
of the securities market as a major source of fi- ments. There appears to be growing preference
nance for trade and industry. A growing number for direct financing (equity and debt) to indirect
of companies are accessing the securities market financing (bank loan) within the external sources.

SEBI BULLETIN ■ VOL. 1 ■ PART 3 ■ MARCH 2003 ■ 32

 SPEECHES
According to CMIE data, the share of capital mar-
ket based instruments in resources raised exter-
nally increased to 53% in 1993-94, but declined
thereafter to 31% by 2000-01.
Average annual capital mobilisation from the pri-
mary market, which used to be about Rs.70 crore
in the 1960s and about Rs.90 crore in the 1970s,
increased manifold during the 1980s, with the
amount raised in 1990-91 being Rs. 4,312 crore. It
received a further boost during the 1990s with the
capital raised by non-government public compa-
nies rising sharply to Rs. 26,417 crore in 1994-95.
The market appears to have dried up in the late
1990s due to inter-play of various factors. The
corporates have shifted focus to other avenues for
raising resources like private placement where
compliance is much less. Available data, although
scanty, indicate that private placement has become
a preferred means of raising resources by the cor-
porate sector. Private placement contributed
about Rs. 65,000 crore during 2001-02. The cor-
porate sector raised a total Rs. 74,403 crore dur-
ing 2001-02 from the securities market.
The market is getting institutionalised as people
prefer mutual funds as their investment vehicle,
thanks to evolution of a regulatory framework for
mutual funds. The net collections by mutual funds
picked up during 1990s and increased to Rs. 19,953
crore during 1999-2000. Starting with an asset
base of Rs. 25 crore in 1964, the total assets under
management at the end of January 2003 was
Rs. 121,806 crore.
Governments : Along with increase in fiscal defi-
cits of the governments, the dependence on mar-
ket borrowings to finance fiscal deficits has in-
creased over the years. During the year 1990-91,
the State Governments and the Central Govern-
ment financed nearly 14% and 18% respectively of
their fiscal deficit by market borrowing. In per-
centage terms, dependence of the State Govern-
ments on market borrowing did not increase much
during the decade 1991-2001. In case of Central
Government, it increased to 69.4% by 2001-02. The
Central Government and the State Governments
together borrowed Rs. 110,510 crore from
SEBI BULLETIN ■ VOL. 1
29
market during 2001-02 against Rs. 10,557 crore in
1990-91.
The primary issues of the Central Government
have increased many-fold during the decade
of 1990s from Rs. 8,989 crore in 1990-91 to
Rs. 133,801 crore in 2001-02. The issues by State
Governments increased by about five times from
Rs. 2,569 crore to Rs. 18,707 crore during the same
period.
Households: According to RBI data, household
sector accounted for 89% of gross domestic sav-
ings during 2000-01. They invested only 4% of their
savings in securities, including government secu-
rities and units of mutual funds during 2000-2001.
The share of financial savings of the household
sector in securities (shares, debentures, public sec-
tor bonds and units of UTI and other mutual funds
and government securities) is estimated to have
gone down from 22.9% in 1991-92 to 4.3% in 2000-
01.
Investor Population: The Society for Capital Mar-
ket Research and Development carries out peri-
odical surveys of household investors to estimate
the number of investors. Their first survey car-
ried out in 1990 placed the total number of share
owners at 90-100 lakh. Their second survey esti-
mated the number of share owners at around 140-
150 lakh as of mid-1993. Their third survey esti-
mates the number of shareowners at around 2
crore at 1997 end.
According to the SEBI-NCAER survey of Indian
investors conducted in early 1999, an estimated
12.8 million, or 7.6%, of all Indian households rep-
resenting 19 million individuals had directly in-
vested in equity shares and or debentures as at
the end of financial year 1998-99. An estimated 15
million, or nearly 9%, of all households represent-
ing at least 23 million unit holders had invested in
units of mutual funds.
Disinvestment Programme
The disinvestment programme in India would not
have been successful if it did not have a well de-
veloped securities market. So far, Government of
India has been able to disinvest to the tune of over
■ PART 3 ■ MARCH 2003 ■ 33
 30 SECURITIES AND EXCHANGE BOARD OF INDIA

Rs. 31,000 crore, including about Rs. 5,000 during
the current fiscal.
Reforms in Securities Market
With the objectives of improving market effi-
ciency, enhancing transparency, preventing unfair
trade practices and bringing the Indian market up
to international standards, a package of reforms
consisting of measures to liberalise, regulate and
develop the securities market was introduced. The
practice of allocation of resources among differ-
ent competing entities as well as its terms by a
central authority was discontinued. The issuers
complying with the eligibility criteria were allowed
freedom to issue the securities at market deter-
mined rates. The secondary market overcame the
geographical barriers by moving to screen based
trading. All kinds of securities - debt and equity,
government and corporate - are traded on ex-
change side by side. Trades enjoyed counter-party
guarantee. The trading cycle shortened to a day
and trades are settled within 3 working days, while
all deferral products were banned. Physical secu-
rity certificates almost disappeared. A variety of
derivatives were permitted. Corporate governance
has improved significantly. As a result of these
reforms, the market design has changed drasti-
cally for better as may be seen from Table 3. This
has boosted the confidence of international inves-
tors in Indian securities market. Indian market is
getting integrated with the global market though
in a limited way through euro issues. Since 1992,
when they were permitted access, Indian compa-
nies have raised about Rs. 37,000 crore through
ADRs/GDRs. More than 500 FIIs are currently
registered with SEBI. They have made net cumu-
lative investments of about US $ 16 billion by the
end of February 2003. One can gauge the extent
of reforms in the securities market from the
change in transactions costs. The market impact
cost of transactions in equity on stock exchanges
has reduced from 0.75% in mid-1993 to 0.10% in
January 2003. The brokerage has reduced from
3% to 0.15%. Lower transaction cost means higher
attraction for investors in securities and issuers
of securities to participate in the market on a larger
scale.

Table 3 : Elements of Market Design in Indian Securities Market, 1992 and 2003
Features 1992 2003
Regulator No Specific Regulator, A specialized regulator for securities market (SEBI) vested
but Central Government with powers to protect investors’ interest and to develop and
oversight regulate securities market. SROs strengthened.
Intermediaries Some of the intermediaries A variety of specialized intermediaries emerged. They are
(stock brokers, authorized registered and regulated by SEBI (also by SROs). They as well
clerks and remisiers) regulated as their employees are required to follow a code of conduct
by the SROs. and are subject to a number of compliances.
Access to Granted by Central Eligible issuers access the market after complying with the
Market Government issue requirements.
Pricing of Determined by Central Determined by market, either by the issuer through fixed price
Securities Government or by the investors through book building
Access to No access Corporates allowed to issue ADRs/GDRs and raise ECBs.
International ADRs/GDRs have two way fungibilty. FIIs allowed trade in
market Indian market. MFs also allowed to invest overseas
Corporate Very little emphasis Emphasis on disclosures, accounting standards and corporate
Compliance governance
Mutual Funds Restricted to public Open to private sector and emergence of a variety of funds
sector and schemes

SEBI BULLETIN ■ VOL. 1 ■ PART 3 ■ MARCH 2003 ■ 34

 SPEECHES 31

Features 1992 2003

Trading Open outcry, Available at the Screen based trading system, Orders are matched on price-
Mechanism trading rings of the exchanges, time priority, Transparent, Trading platform accessible from
Opaque, Auction/negotiated all over country
deals
Aggregation Fragmented market through Order flow observed. The exchanges have open electronic
order flow geographical distance. Order consolidated limit order book (OECLOB).
flow unobserved.
Anonymity in Absent Complete
Trading
Settlement Bilateral Clearing House of the Exchange or the Clearing Corporation
System is the central counter-party
Settlement 14 day account period settle- Rolling settlement on T+3 basis
Cycle ment, but not adhered to
always
Counter-party Present Absent
risk
Form of Physical Mostly Electronic
Settlement
Basis of Bilateral Netting Multilateral Netting
settlement
Transfer of Cumbersome. Transfer by Securities are freely transferable. Transfers are recorded
securities endorsement on security electronically in book entry form by depositories.
and registration by issuer
Risk No focus on risk Comprehensive risk management system encompassing
Management management capital adequacy, limits on exposure and turnover, VaR based
margining, client level gross margining, on-line position moni-
toring etc.
Derivatives Absent Exchange traded futures and Options available on
Trading two indices and select securities

Market is efficient means the enterprises that do
well in the real sectors are rewarded with funds
for growth and expansion. All these inevitably lead
to higher economic growth.
Road Ahead for Securities Market
The securities market promotes economic growth.
More efficient is the securities market, the greater
is the promotion effect on economic growth. It is,
therefore, necessary to ensure that our securities
market is efficient, transparent and safe. In this
direction, SEBI has been working since its incep-
tion and would continue to work to continuously
improve market design to bring in further effi-
ciency and transparency to market and make
available newer and newer products to meet the
varying needs of market participants, while pro-
tecting investors in securities. The aim is to make
Indian securities market a model for other juris-
dictions to follow and make SEBI the most dy-
namic and respected regulator globally. Some of
the initiatives on which SEBI is working are:
a. Introducing exchange traded interest rate
derivatives
b. Promoting an index to comprehensively re-
flect the level of corporate governance
c. Setting up a central listing authority to
dynamise listing requirements
d. Facilitating demutualization of stock ex-
changes

SEBI BULLETIN ■ VOL. 1 ■ PART 3 ■ MARCH 2003 ■ 35

32 SECURITIES AND EXCHANGE BOARD OF INDIA

e. Building a cadre of securities market profes-
sionals through training and certification
f. Constructing a central registry of securities
market participants and professionals
g. Rationalising margin trading, securities lend-
ing and short selling
h. Promoting secondary market for corporate
debt securities
i. Implementing market wide straight through
processing from trade initiation to settlement
j. Operationalising T+1 rolling settlement
k. Reviewing all regulations of SEBI and code
of conduct for intermediaries
l. Providing a legal framework for central
counter-party
m. Consolidation of exchanges and other mar-
ket participants
n. Benchmarking Indian securities market with
best in the World
I am sure, these measures would definitely im-
prove efficiency of the market leading to higher
economic growth.
■■

SEBI BULLETIN ■ VOL. 1 ■ PART 3 ■ MARCH 2003 ■ 36


I. Code of Conduct for Sub-Brokers
T
he code of conduct for sub-brokers is
prescribed in Regulation 15 of the SEBI
(Stock Brokers and Sub-brokers) Regula-
tions, 1992. In view of the changed market struc-
ture, a need was felt for a review of the regula-
tions, including the code of conduct. An internal
group of SEBI has proposed the following code of
conduct for sub-brokers:
A. General : A sub-broker shall maintain high stan-
dards of integrity, promptitude and fairness and
act with due skill, care and diligence in the con-
duct of securities business.
B. Duty to the Investor : A sub-broker, in his deal-
ings with the clients and the general investing pub-
lic, shall faithfully and promptly place the orders
for buying and selling of securities. He shall
promptly inform his client about the execution or
non-execution of an order and promptly make
payment in respect of securities sold and arrange
for prompt delivery of securities purchased by cli-
ents. He shall promptly redress the grievances of
its investors as soon as brought to its knowledge.
He shall not (a) match the purchase and sale or-
ders of his clients and each order must invariably
be routed through a member-broker of the stock
exchange with whom he is affiliated, (b) encour-
age sales or purchases of securities with the sole
object of generating brokerage, (c) charge from
his clients a brokerage (including the brokerage
charged by the broker) exceeding two and half
percentage of the trade executed price, (d) disclose
or discuss or make improper use of the details of
dealings in securities and other information of a
confidential nature of the client which it comes to
know in its business relationship, (e) deal or trans-
act business knowingly, directly or indirectly or
execute an order for a client who has failed to
carry out his commitments in relation to securi-
ties and is in default with another broker or sub-
broker, (f) make a recommendation to any client
who might be expected to rely thereon to acquire,
dispose of, retain any securities unless he has rea-
sonable grounds for believing that the recommen-
SEBI BULLETIN ■ VOL. 1
33
dation is suitable for such
a client upon the basis of
the facts, if disclosed by
such a client as to his own
security holdings, finan-
cial situation and objec-
tives of such investment,
and (g) render, directly
and indirectly any invest-
ment advice about any
security in the publicly accessible media, whether
real-time or non-real-time, unless a disclosure of
his interest including his long or short position in
the said security has been made, while rendering
such advice.
C. Sub-Brokers vis-a-vis Stock Brokers : A sub-
broker shall co-operate with his broker. He shall
promptly replace/and rectify documents which
are declared as bad delivery as per the prevailing
norms and make available documents as called
for by broker for enquiries relating to fulfilment
of all contracts and also present the same for in-
spection as and when called for by broker. He shall
extend fullest co-operation to his stock-broker in
protecting the interests of their clients. He shall
not advertise his business publicly unless permit-
ted by the stock exchange and not resort to unfair
means of inducing clients from other brokers/
Sub-brokers.
D. Sub-Brokers vis-a-vis Regulatory Authorities :
A sub-broker shall not indulge in dishonourable,
disgraceful or disorderly or improper conduct on
the stock exchange nor shall it wilfully obstruct
the business of the stock exchange. It shall com-
ply with the rules, bye-laws and regulations of the
stock exchange and circulars, notices, and other
instructions issued by the Board and the relevant
Stock Exchange(s). He shall not indulge in manipu-
lative, fraudulent or deceptive transactions. It shall
also not indulge/float schemes or spread news
with a view to distorting market equilibrium or
making personal gains. He shall not create false
market either singly or in concert with others or
■ PART 3 ■ MARCH 2003 ■ 37
 34
indulge in any act detrimental to the public inter-
est or which leads to interference with the fair and
smooth functions of the market mechanism of the
stock exchanges. He shall not involve himself in
excessive speculative business in the market be-
yond reasonable levels not commensurate with his
financial soundness.
Ref: Discussion Paper on Code of Conduct
for Sub-Brokers, available at http://
www.sebi.gov.in.
II. Corporate Governance
Corporate governance is the acceptance by man-
agement of the inalienable rights of shareholders
as the true owners of the corporation and of their
own role as trustees on behalf of the sharehold-
ers. It is about commitment to values, about ethi-
cal business conduct and about making a distinc-
tion between personal and corporate funds in the
management of a company.
SEBI felt a need to review the existing code on
corporate governance from two perspectives, (a)
to evaluate the adequacy of the existing practices,
and (b) to further improve the existing practices,
and constituted a committee on corporate gover-
nance, comprising representatives from the stock
exchanges, chambers of commerce, investor as-
sociations and professional bodies under the Chair-
manship of Shri N. R. Narayana Murthy. The terms
of reference of the Committee are: to review the
performance of corporate governance; and to de-
termine the role of companies in responding to
rumour and other price sensitive information cir-
culating in the market, in order to enhance the
transparency and integrity of the market.
The key issues debated by the Committee and the
related recommendations are presented below:
A. Audit Committees
a. Review of information by audit committees:
Audit committees of publicly listed compa-
nies should be required to review (i) Finan-
cial statements and draft audit report, includ-
ing quarterly/half-yearly financial informa-
tion; (ii) Management discussion and analy-
SEBI BULLETIN ■ VOL. 1
SECURITIES AND EXCHANGE BOARD OF INDIA
sis of financial condition and results of op-
erations; (iii) Reports relating to compliance
with laws and to risk management; (iv) Man-
agement letters/letters of internal control
weaknesses issued by statutory/internal au-
ditors; and (v) Records of related party trans-
actions.
b. Financial literacy of members of the audit
committee: All audit committee members
should be “financially literate” and at least one
member should have accounting or related
financial management expertise.
B. Audit Reports and Audit Qualifications
a. Disclosure of accounting treatment: In case a
company has followed a treatment different
from that prescribed in an accounting stan-
dard, management should justify why they
believe such alternative treatment is more
representative of the underlying business
transaction. Management should also clearly
explain the alternative accounting treatment
in the footnotes to the financial statements.
b. Audit qualifications: Companies should be
encouraged to move towards a regime of un-
qualified financial statements. This recom-
mendation should be reviewed at an appro-
priate juncture to determine whether the fi-
nancial reporting climate is conducive to-
wards a system of filing only unqualified fi-
nancial statements.
C. Related Party Transactions
a. Basis for related party transactions: A state-
ment of all transactions with related parties
including their bases should be placed before
the independent audit committee for formal
approval/ratification. If any transaction is not
on an arm’s length basis, management should
provide an explanation to the audit commit-
tee justifying the same.
b. Definition of “related party”: The term “related
party” shall have the same meaning as con-
tained in Accounting Standard 18, Related
Party Transactions, issued by the Institute of
Chartered Accountants of India.
■ PART 3 ■ MARCH 2003 ■ 38
 DISCUSSION PAPERS/COMMITTEE REPORTS
D. Risk Management
a. Board disclosures: Procedures should be in
place to inform Board members about the
risk assessment and minimisation procedures.
These procedures should be periodically re-
viewed to ensure that executive management
controls risk through means of a properly
defined framework. Management should
place a report before the entire Board of Di-
rectors every quarter documenting the busi-
ness risks faced by the company, measures
to address and minimize such risks, and any
limitations to the risk taking capacity of the
corporation. This document should be for-
mally approved by the Board.
b. Training of Board members: Companies
should be encouraged to train their Board
members in the business model of the com-
pany as well as the risk profile of the busi-
ness parameters of the company, their re-
sponsibilities as directors, and the best ways
to discharge them.
E. Proceeds from Initial Public Offerings
a. Use of proceeds : Companies raising money
through an Initial Public Offering (“IPO”)
should disclose to the Audit Committee, the
uses/applications of funds by major category
(capital expenditure, sales and marketing,
working capital, etc.), on a quarterly basis. On
an annual basis, the company shall prepare a
statement of funds utilised for purposes other
than those stated in the offer document/pro-
spectus. This statement should be certified by
the independent auditors of the company. The
audit committee should make appropriate
recommendations to the Board to take up
steps in this matter.
F. Code of Conduct
Written code for executive management : It should
be obligatory for the Board of a company to lay
down the code of conduct for all Board members
and senior management of a company. This code
of conduct shall be posted on the website of the
company. All Board members and senior manage-
ment personnel shall affirm compliance with the
SEBI BULLETIN ■ VOL. 1
35
code on an annual basis. The annual report of the
company shall contain a declaration to this effect
signed off by the CEO and COO.
G. Nominee Directors
Exclusion of nominee directors from the defini-
tion of independent directors: There shall be no
nominee directors. Where an institution wishes to
appoint a director on the Board, such appointment
should be made by the shareholders. An institu-
tional director, so appointed, shall have the same
responsibilities and shall be subject to the same
liabilities as any other director. Nominee of the
Government on public sector companies shall be
similarly elected and shall be subject to the same
responsibilities and liabilities as other directors.
H. Non-Executive Director Compensation
Limits on compensation paid to independent di-
rectors: All compensation paid to non-executive
directors may be fixed by the Board of Directors
and should be approved by shareholders in gen-
eral meeting. Limits should be set for the maxi-
mum number of stock options that can be granted
to non-executive directors in any financial year
and in aggregate. The stock options granted to the
non-executive directors shall vest after a period
of at least one year from the date such non-ex-
ecutive directors have retired from the Board of
the Company. Companies should publish their
compensation philosophy and statement of en-
titled compensation in respect of non-executive
directors in their annual report. Alternatively, this
may be put up on the company’s website and ref-
erence drawn thereto in the annual report. Com-
panies should disclose on an annual basis, details
of shares held by non-executive directors, includ-
ing on an “if-converted” basis. Non-executive di-
rectors should be required to disclose their stock
holding (both own or held by/for other persons
on a beneficial basis) in the listed company in
which they are proposed to be appointed as direc-
tors, prior to their appointment. These details
should accompany their notice of appointment.
I. Independent Directors
Definition of independent directors: The term “in-
dependent director” is defined as a non-executive
■ PART 3 ■ MARCH 2003 ■ 39
 36
director of the company who (i) apart from re-
ceiving director remuneration, does not have any
material pecuniary relationships or transactions
with the company, its promoters, its senior man-
agement or its holding company, its subsidiaries
and associated companies; (ii) is not related to pro-
moters or management at the board level or at
one level below the board; (iii) has not been an
executive of the company in the immediately pre-
ceding three financial years; (iv) is not a partner
or an executive of the statutory audit firm or the
internal audit firm that is associated with the com-
pany, and has not been a partner or an executive
of any such firm for the last three years; (v) is not
a supplier, service provider or customer of the
company. This should include lessor-lessee type
relationships also; and (vi) is not a substantial
shareholder of the company, i.e. owning two per-
cent or more of the block of voting shares. The
considerations as regards remuneration paid to
an independent director shall be the same as those
applied to a non-executive director.
J. Whistle Blower Policy
a. Internal policy on access to audit committees:
Personnel who observe an unethical or im-
proper practice (not necessarily a violation of
law) should be able to approach the audit
committee without necessarily informing
their supervisors. Companies shall take mea-
sures to ensure that this right of access is com-
municated to all employees through means
of internal circulars, etc. The employment and
other personnel policies of the company shall
contain provisions protecting “whistle blow-
ers” from unfair termination and other un-
fair prejudicial employment practices.
b. Whistle blower policy: Companies shall annu-
ally affirm that they have not denied any per-
sonnel access to the audit committee of the
company (in respect of matters involving al-
leged misconduct) and that they have pro-
vided protection to “whistle blowers” from
unfair termination and other unfair or preju-
dicial employment practices. The appoint-
ment, removal and terms of remuneration of
the chief internal auditor must be subject to
SEBI BULLETIN ■ VOL. 1
SECURITIES AND EXCHANGE BOARD OF INDIA
review by the Audit Committee. Such affir-
mation shall form a part of the Board report
on Corporate Governance that is required to
be prepared and submitted together with the
annual report.
K. Subsidiary Companies
Audit committee requirements: The provisions
relating to the composition of the Board of Direc-
tors of the holding company should be made ap-
plicable to the composition of the Board of Direc-
tors of subsidiary companies. At least one inde-
pendent director on the Board of Directors of the
parent company shall be a director on the Board
of Directors of the subsidiary company. The Au-
dit Committee of the parent company shall also
review the financial statements, in particular the
investments made by the subsidiary company. The
minutes of the Board meetings of the subsidiary
company shall be placed for review at the Board
meeting of the parent company. The Board report
of the parent company should state that they have
reviewed the affairs of the subsidiary company
also.
L. Evaluation of Board Performance
Mechanism for evaluating non-executive board
members: The performance evaluation of non-
executive directors should be by a peer group com-
prising the entire Board of Directors, excluding the
director being evaluated; and peer group evalua-
tion should be the mechanism to determine
whether to extend/continue the terms of appoint-
ment of non-executive directors.
M. Analyst Reports
Disclosures in reports issued by security analysts:
SEBI should make rules for (i) Disclosure in the
report issued by a security analyst whether the
company that is being written about is a client of
the analyst’s employer or an associate of the
analyst’s employer, and the nature of services ren-
dered to such company, if any; and (ii) Disclosure
in the report issued by a security analyst whether
the analyst or the analyst’s employer or an associ-
ate of the analyst’s employer hold or held (in the
12 months immediately preceding the date of the
■ PART 3 ■ MARCH 2003 ■ 40
 DISCUSSION PAPERS/COMMITTEE REPORTS
report) or intend to hold any debt or equity in-
strument in the issuer company that is the sub-
ject matter of the report of the analyst.
The key mandatory recommendations focus on
strengthening the responsibilities of audit commit-
tees; improving the quality of financial disclosures,
including those related to related party transac-
tions and proceeds from initial public offerings;
requiring corporate executive boards to assess and
disclose business risks in the annual reports of
companies; introducing responsibilities on boards
to adopt formal codes of conduct; the position of
nominee directors; and stock holder approval and
improved disclosures relating to compensation
paid to non-executive directors. Non-mandatory
recommendations include moving to a regime
where corporate financial statements are not
qualified; instituting a system of training of board
members; and the evaluation of performance of
board members.
Ref: Report of the SEBI Committee on Cor-
porate Governance, available at http://
www.sebi.gov.in.
III. Exchange Traded Interest
Rate Derivatives in India
The SEBI Group on Secondary Market Risk Man-
agement met on 12th March, 2003 to design the
risk containment measures for the exchange-
traded interest rate derivatives. The outcome of
this meeting is a Consultative Document which
contains a time-table for introduction of exchange-
traded interest rate derivatives, a road map for
introduction of additional products, risk contain-
ment measures for the initial set of derivatives,
organizational and structural issues, etc. The sa-
lient features of the document are summarised
below:
a. Exchange-traded derivatives would provide
the household sector, along with the finan-
cial and corporate sectors, greater access to
interest rate risk management tools.
b. The futures as well as options could be
launched on a notional ten year treasury bond
as the 10-year bonds provide the most liquid
SEBI BULLETIN ■ VOL. 1
37
underlying market in government securities
as of date. These contracts would initially be
settled on cash basis and could be upto a
maximum maturity of one year. In the short-
term interest rate segment, the futures and
options could be introduced on notional
T-Bills with a maturity of 91 days, again on
cash-settled basis.
c. The interest rate futures could be traded on
the stock exchanges with two decimal quotes
to begin with. The Group considered the ne-
cessity and time-frame for software changes
to implement four-decimal quotes, and de-
cided that four decimal quotes be introduced
within a time-frame of 6 months.
d. Presently the zero coupon yield curve (ZCYC)
was not fully accurate and this would result
in basis risk involved in hedging with prod-
ucts based on ZCYC. But such basis risk could
not be considered a show stopper since all
hedges involve some degree of basis risk.
Moreover, using an imperfect hedge was pref-
erable to not being able to hedge at all. The
Group was of the view that development of a
more acceptable ZCYC would take about 3
months time, further one month time is nec-
essary for back testing and regulatory review
and another 2 months time for software
implementation. Therefore, the Group desired
that an improved yield curve be implemented
within 6 months, and provided quantitative
benchmarks for the ZCYC.
e. The Group observed that the research was
still going on in the field of volatility dynam-
ics of interest rates in India and the resulting
margining requirements, and that the devel-
opment of a more elaborate model of inter-
est rate dynamics could take two to three
months.
f. Till such time a better model is made avail-
able, the Group recommended that the ex-
change-traded interest rate futures and op-
tions on the ten year notional government
bond and on notional 91 days T-bills be
launched with a risk containment system that
produces significant over-margining (by mak-
■ PART 3 ■ MARCH 2003 ■ 41
 38
ing only parameter changes to the equity
market margining system) but achieves the
regulatory standards of market safety. Such
over-margining would compensate for model
risk.
g. The Group decided that interest rate deriva-
tive products should be traded on the exist-
ing equity derivative exchanges under the ex-
isting market structure. The risk containment
measures applicable to interest rate deriva-
tives shall also be on the same lines as appli-
cable to equity derivatives.
Ref: Report of the SEBI Group on Secondary
Market Risk Management on Exchange-
traded Interest rate Derivatives in India, avail-
able at http://www.sebi.gov.in.
IV. Review of SEBI (DIP)
Guidelines 2000
The Primary Market Advisory Committee of SEBI
had set up a Group to review the present eligibil-
ity norms and suggest changes, if any. The Group
submitted the report to the Committee, which ac-
cepted the recommendations, with some modifi-
cations. The following is a summary of the rec-
ommendation of the Group:
A. Eligibility Norms for Initial Public Offering of
Equity: (1) A company can make an IPO, subject
to the condition that as on date of filing of the draft
offer document with SEBI, (a) the company shall
have Net Tangible Assets of at least Rs. 3 crore in
each of the preceding 2 full years (of 12 months
each), of which not more than 50% is held in mon-
etary assets, (provided that if more than 50% are
held in monetary assets, the company should have
firm commitments to deploy such excess mon-
etary assets in its business/project.), (b) The com-
pany shall have a Net Worth of at least Rs. 1 crore
in each of the preceding 2 full years (of 12 months
each), (c) In case the issuer company has changed
its name within the last one year, at least 50% of
the revenue for the preceding 1 full year shall be
accounted for by the activity suggested by the new
name, and (d) The issue size shall not exceed 5
times the pre-issue net worth of the company.
SEBI BULLETIN ■ VOL. 1
SECURITIES AND EXCHANGE BOARD OF INDIA
(2) In case any of the criteria (a, b, c and d) above
is not met, the company can make an IPO, subject
to the condition that (a) The issue shall be made
only through the book-building process, with at
least 40% of the issue size allotted to the Qualified
Institutional Buyers, failing which the full subscrip-
tion monies shall be refunded or (b) The “project”
should have at least 15% participation by FIs/
scheduled commercial banks, of which at least 10%
should come from the appraiser(s). Further, the
minimum post-issue face value capital of the com-
pany shall be Rs. 10 crore, or there shall be a com-
pulsory market-making for at least 2 years from
the date of listing of the shares. In addition, the
company shall also satisfy the criteria of having
at least 1000 allottees in its issue.
B. Eligibility Norms for Issues of Equity Shares
other than IPOs: There shall not be any entry re-
strictions on any further issue, whether public or
rights, by an already listed company, except in the
circumstances: (a) In case the issue size in a fur-
ther public issue is more than 5 times the pre-is-
sue net worth, the issuer company shall be re-
quired to comply with the eligibility criteria speci-
fied at A (1) or (2) above. (b) In case there is a
change in the name of the issuer company within
the last 1 year (reckoned from the date of filing of
the offer document) and the revenue accounted
for by the activity suggested by the new name is
less than 50% of its total revenue in the preceding
1 full-year period, the issuer company shall be re-
quired to comply with the criteria specified at (A)
(2) above. The aforesaid Eligibility Norms shall also
apply to Offers for Sale made by unlisted compa-
nies, to the extent applicable.
C. Eligibility Norms for Issues of Instruments other
than Equity Shares: The recommendations per-
taining to equity shares should apply mutatis
mutandis to all convertible instruments. In the case
of issuance of debt instruments, the following ad-
ditional norms should also be stipulated: (a) The
issue of debt instrument should receive at least
an “investment grade” rating, (ii) The company
should have 2 credit ratings, irrespective of the
issue size, (iii) The company should not be in the
list of willful defaulter of RBI, as on date of filing
draft offer document with SEBI, (iv) The company
■ PART 3 ■ MARCH 2003 ■ 42
 DISCUSSION PAPERS/COMMITTEE REPORTS
should not be in default of any public debentures
in terms of either interest or principal, and (v) The
debentures should be fully secured. In terms of
number of allottees, it should be 50 (as against 1000
in case of equity issues). The requirement of 20%
promoters’ contribution in the case of debt issues
should be deleted. The continuous disclosures in
terms of listing agreement may be filed with
EDIFAR. The prior consent of NCD holders for
change in shareholding pattern, capital structure
etc. may be deleted.
D. Other Related Issues: Other recommendations
include:
a. Even in respect of rights issues of upto Rs.50
lakh, the offer document must be prepared
in compliance with SEBI DIP Guidelines and
filed with SEBI for information purpose only
and put on SEBI Website.
b. The following may be added to the list of QIBs:
(a) Pension funds, provident funds, superan-
nuation funds and gratuity funds. (With mini-
mum corpus under management of Rs. 25
crore), (ii) Port trusts (With minimum corpus
under management of Rs. 25 crore), (iii) Port-
folio managers registered with SEBI (With
SEBI BULLETIN ■ VOL. 1
39
minimum corpus under management of
Rs. 25 crores) and (iv) Insurance companies
registered with IRDA.
c. Only such banks as fall in the list of sched-
uled commercial banks as defined by RBI
should be allowed to appraise and participate
in such projects.
d. The QIB requirement may be diluted to 40%
across all book-building issues, not only in
case of mandatory book-building. The exist-
ing SEBI guidelines require mandatory par-
ticipation from QIBs to the extent of 60% in
case of companies not fulfilling the eligibility
criteria. Even in case of companies which ful-
fil the eligibility criteria and wish to make the
issue through book-building mechanism, the
companies are required to allocate 25% to
retail investors and 15% to non-institutional
investors, thereby leaving 60% available for
allocation to QIBs. This should be brought
down to 40%.
Ref: Review of SEBI (DIP) Guidelines -
Proposals - Series II, available at http://
www.sebi.gov.in.
■■
■ PART 3 ■ MARCH 2003 ■ 43
 40
I. Codes of Conduct for Regulated Entities
S IV. Governing
EBI had put up a discussion paper on “Codes
of Conduct for regulated entities” on its
website. In connection with the code of con-
duct for the Foreign Institutional Investors, SEBI
received certain queries in particular with regard
to clause 8 (d) of the codes of conduct: “It shall
not deal with any derivative instruments issued
outside India where in underlying is/are Indian
securities either directly or indirectly.” It is hereby
clarified that this discussion paper does not intend
to suggest any policy change, so far as FIIs are
concerned and the present set of policies and prac-
tices will continue.
Ref: Press Release No. 57 dated March 3, 2003.
II. Report on Corporate
Governance
SEBI released the report of the Committee on
Corporate Governance constituted by SEBI un-
der the chairmanship of Shri N R Narayana
Murthy and placed it on its website for public com-
ments. The summary of the report is published
elsewhere in this bulletin.
Ref: Press Release No. 72 dated March 21, 2003.
III. Review of SEBI (DIP)
Guidelines 2000
SEBI released a discussion paper, entitled “Review
of SEBI (DIP) Guidelines 2000- Proposals - Series
II” containing the recommendations made by the
Primary Market Advisory Committee of SEBI,
which was set up by SEBI to advise SEBI on mat-
ters relating the primary market. The recommen-
dations cover the eligibility norms for public/rights
issues of securities, both through IPOs and fur-
ther offerings and other incidental matters. The
paper has been hosted on the website for the pur-
pose of eliciting public comments. The summary
of the paper is published elsewhere in this bulle-
tin.  
Ref: Press Release No. 75 dated March 25, 2003.  same. Further, the inspecting officer mentioned
SEBI BULLETIN ■ VOL. 1
SECURITIES AND EXCHANGE BOARD OF INDIA
Board of
Ahmedabad
Stock Exchange
SEBI, by Order issued
under section 11 of the
Securities Contracts
(Regulation) Act, 1956,
superseded the Governing Board of the
Ahmedabad Stock Exchange (ASE), with effect
from March 25, 2003 and appointed Shri P K
Ghosh IAS (Retd.) as the administrator of the ex-
change to exercise and perform all the powers and
duties of the Board.
During the course of inspection, SEBI had ob-
served that a parallel exchange/Market appeared
to exist at the Stock Exchange in the form of an
unofficial market with open out-cry and the same
was conducted at the ground floor of the premises.
SEBI had advised the Stock Exchange to take
immediate steps to stop the unofficial market. The
exchange was also advised to investigate the mat-
ter and take immediate action against the mem-
bers if any involved in the unofficial market. The
exchange was also advised to send a status report
on action taken to SEBI latest by September 02,
2002. The Stock Exchange vide its letter dated
August 30, 2002, informed that the exchange was
initiating an enquiry into the matter and would
submit a report within a short time. Thus, the ex-
change has shown disregard to the deadline given
by SEBI to investigate the matter and submit the
status report on unofficial market by September
02, 2002 as advised by SEBI.
Subsequently, on September 19, 2002, SEBI con-
ducted a surprise inspection of ASE. The inspect-
ing officer of SEBI observed that an unofficial
market in an open out-cry fashion was being held
within the stock exchange premises and members
of the exchange were also participating in the
■ PART 3 ■ MARCH 2003 ■ 44
 PRESS RELEASES 41
that (a) ASE had not taken any steps to stop the
unofficial market despite instructions from SEBI,
V. Investor Grievances
and (b) ASE submitted a false report to SEBI that During March 2003, SEBI received 1427 griev-
the unofficial market was not conducted within ances against listed companies. During the same
the official premises of the stock exchange and period, 6205 grievances were reported redressed.
that members of ASE were not participating in These redressed grievances include grievances
such unofficial market. brought forward from the previous periods. The
SEBI, therefore, was of the opinion that the Board details of grievances received and addressed are
has failed to ensure proper governance, implemen- given below:
tation of the provisions of the Securities Contracts Type of Grievances Grievances
(Regulation) Act, 1956, Bye-Laws of the Exchange Grievance Received Redressed
and SEBI direction/Guidelines. In view of the I 33 855
above serious deficiencies, SEBI issued a notice
under Sec. 11 of the Securities Contracts (Regu- II 282 509
lation) Act, 1956 to the Governing Board of ASE III 468 2743
as to why they should not be superceded. An op- IV 539 1654
portunity of hearing was given on November 20,
V 105 444
2002. However, it was observed that the Govern-
ing Board had not rectified or addressed the is- Total 1427 6205
sues. The Governing Board has failed to ensure Note: Type I: Non-receipt of refund orders/allotment letters
proper governance, implementation of the provi- etc.
sions of the Securities Contracts (Regulation) Act, Type II: Non-receipt of dividend.
1956, Bye-laws of the Exchange and SEBI Direc- Type III: Non-receipt of share certificates/bonus shares.
tives. As a result of this, the confidence of the in-
Type IV: Non-receipt of debenture certificates/interest on
vestors in transparent and impartial working of debentures/redemption amount of debentures/interest on
the stock exchange has been impaired. delayed payment of interest on debentures/redemption
amount of debentures.
Therefore, it was felt that it is essential to adopt
immediate measures to ensure the safety and in- Type V: Non-receipt of right forms/interest on delayed re-
ceipt of refund order.
tegrity of the stock exchange and further to en-
sure that transactions on ASE are carried out as Ref: Press Releases No. 74 dated March 24,
per the regulatory framework and the interest of 2003 and No. 84 dated April 4, 2003.
the investors are not jeopardized further. Accord- ■■
ingly SEBI superceded the Governing Board of
ASE.
Ref: Press Release No. 77 dated March 26, 2003.

SEBI BULLETIN ■ VOL. 1 ■ PART 3 ■ MARCH 2003 ■ 45

 42 SECURITIES AND EXCHANGE BOARD OF INDIA

I. Calendar for T+2 Rolling Settlement

Circulars
I
t has been decided to shorten the settlement 4. Pay-out of securities
cycle from the existing T+3 rolling settlement
to T+2 rolling settlement w.e.f. April 1, 2003.
by the exchange/
Clearing House/
&
After detailed deliberations with various market Clearing Corporation Guidelines
participants, a time schedule for the implementa- to the Depositories by
tion of T+2 rolling settlement beginning from April 1:30 p.m. on T+2.
1, 2003 was prescribed by SEBI on January 3, 2003. 5. Pay-out of securities
A summary of the time schedule is as follows: to be completed by
Sl. No. Day Time Description of activity the Depositories by
2:00 p.m. on T+2.
1 T Trade Day
2 T+1 By 11:00 Confirmation of all trades 6. All instructions received by the Depository
a.m. (including custodial trades). Participants must have an execution date. The
Facility of an exceptional win- execution date can be current date or future
dow for late confirmations date. Instructions will be valid till the pay-in
would be made available by
deadline or till ‘end of day’ (EOD) of the ex-
the exchanges.
ecution date, whichever is earlier. DPs would
By 1:30 Processing and downloading
bring this to the notice of the client while ac-
p.m. of obligation files to brokers/
custodians cepting instructions. In case the account does
not have sufficient balance before pay-in
3 T+2 By 11:00 Pay-in of securities and funds
a.m. deadline or till EOD, such instructions will fail.
By 1:30 Pay-out of securities and funds Further in order to ensure the smooth implemen-
p.m. tation of T+2 rolling settlement by April 1, 2003
and to facilitate the implementation of T+1 roll-
The Depositories shall adhere to the following ac- ing settlement from April 1, 2004, the Deposito-
tivities as per the prescribed time to implement ries shall initiate the following steps:
the above time schedule for T+2 rolling settlement.
The Depositories would, in turn, advise the Deposi- 1. Implementation of real time online connec-
tory Participants (DPs) to adhere to the designated tivity between the Depositories.
activities within the prescribed time limits and 2. Depositories would be required to design a
therefore, the earlier Circular No. D&CC/FITTC/ system so that the exchanges/Clearing
CIR - 07/2002 dated April 8, 2002 stands modified House/Clearing Corporation would be able
w. e. f. April 1, 2003 as under: to implement a system of online transmission
1. DPs shall accept instructions for pay-in of of client-wise pay-in obligations to the deposi-
securities from clients in the physical form at tory so that the depository in turn could
least upto 4 p.m. and in electronic form at least download the security pay-in instructions to
upto 6 p.m. on T+1. DPs in respect of the investor maintaining
account with them.
2. DPs shall complete execution of pay-in in-
structions latest by 10:30 a. m. on T+2. 3. Depositories are also required to put up sys-
tems to facilitate settlement of transactions
3. Depositories would download the processed by the Clearing House/Clearing Corporation
pay-in files to the exchange/Clearing House/ arising out of securities lending and borrow-
Clearing Corporation latest by 11:00 a.m. on ing to meet shortages of pay-in obligations.
T+2.

SEBI BULLETIN ■ VOL. 1 ■ PART 3 ■ MARCH 2003 ■ 46

 CIRCULARS & GUIDELINES
The Custodians shall adhere to the following ac-
tivities for implementation of T+2 rolling settle-
ment w.e.f. April 1, 2003:
1. Confirmation of the institutional trades by the
custodians latest by 11.00 a.m. on T+1. An
exception window would be provided by the
exchanges for late confirmations for an ad-
ditional fee but in any case the confirmation
should be made before 1:00 p.m. on T+1.
2. The Custodians shall issue instructions in the
physical form upto 4 p.m. and in electronic
form upto 6 p.m. on T+1 to the DPs for pay-
in of securities.
3. Pay-in to be made before 10:30 a.m. on T+2.
Ref: Circular Nos. DCC/FITTC/CIR-19 and
20/2003 dated March 4, 2003.
II. Risk Management for T+2
Rolling Settlement
The SEBI constituted Group on Secondary Mar-
ket Risk Management discussed the issue of the
rationalisation of the margining structure in the
shortened T+2 rolling settlement. The Group held
various meetings and pursuant to the deliberations
of the Group, the stock exchanges shall follow risk
management structure given below w.e.f. April 01,
2003:
A. Categorisation of stocks for imposition of mar-
gins
1. The risk containment measures for the scrips
would be based on their volatility and liquidity.
The scrips would be classified into three groups.
2. The stocks which have traded at least 80% (+/-
5%) of the days for the previous eighteen months
from (1st July 2001) shall constitute the Group I
and Group II.
3. Out of the scrips identified above, the scrips
having mean impact cost of less than or equal to
1% shall be categorised under Group I and the
scrips where the impact cost is more than 1, shall
be categorised under Group II.
4. The remaining stocks would fall into the Group
III.
SEBI BULLETIN ■ VOL. 1
43
5. The impact cost shall be calculated at 15th of
each month on a rolling basis considering the order
book snapshots of the previous six months. On the
basis of the impact cost so calculated, the scrips
shall move from one group to another group from
the 1st of the next month.
B. Calculation of mean impact cost
6. The mean impact cost for the purposes of clas-
sification of the scrips in the two Groups viz. Group
I&II would be calculated in the following manner:
i. Impact cost shall be calculated by taking four
snapshots in a day from the order book in
the past six months. These four snapshots
shall be randomly chosen from within four
fixed ten-minutes windows spread through
the day.
ii. The impact cost shall be the percentage price
movement caused by an order size of Rs.1
Lakh from the average of the best bid and
offer price in the order book snapshot. The
impact cost shall be calculated for both, the
buy and the sell side in each order book snap-
shot.
iii. The computation of the impact cost adopted
by the Exchange would be disseminated on
the website of the exchange.
iv. The Exchanges shall use a common method-
ology for carrying out the calculations for
mean impact cost. The details of calculation
methodology and relevant data shall be made
available to the public at large through the
website of the Exchanges. Any change in the
methodology for the computation of impact
cost would also be disseminated by the Ex-
change.
C. VaR based margins
7. For the stocks in Group I, the VaR margin will
be scrip VaR (3.5 sigma) computed in a manner
specified for the scrip on which stock futures are
traded.
8. On the stocks in Group II where the impact cost
is more than 1, the VaR margin shall be higher of
scrip VaR (3.5 sigma) or three times the index VaR,
and it shall be scaled up by root 3.
■ PART 3 ■ MARCH 2003 ■ 47
 44
9. For the stocks in Group III, the VaR margin
would be equal to five times the index VaR and
scaled up by root 3.
10. For the purposes of determining the margins
for Group II & Group III, the minimum Index VaR
would continue to be taken as 5% as at present.
11. The volatility estimates for the scrips and the
index for the VaR shall be computed on the price
differential of 2 days. The VaR calculated by an
exchange at the end of the previous day would be
used for the purpose of margin calculations for
the transactions carried out on the day.
D. Mark-to-Market Margin
12. In addition to the collection of the VaR based
margins, the exchanges shall continue to collect
mark-to-market margin.
E. Additional Margin
13. The existing 12% additional margin would be
phased out progressively. With effect from April
01, 2003, this additional margin shall be reduced
to 6%. This additional margin shall be further re-
duced on the implementation of advance collec-
tion of VaR based margins.
F. Collection of Margins
14. All these margins would be collected on T+1
basis.
G. Ad hoc/Special Margin
15. The exchanges should at their discretion may
impose additional margin/ad hoc margin/special
margin on scrips wherever necessary to contain
the risk in the market.
H. Gross Exposure Limits
16. The existing provision in respect of capital ad-
equacy and the gross exposure limits shall con-
tinue to apply.
I. Dissemination to the Market
17. The VaR calculations will be based either on
BSE Sensex or S & P CNX Nifty and would be
disseminated by the BSE and NSE daily on their
websites by 6:30 pm in a downloadable format.
SEBI BULLETIN ■ VOL. 1
SECURITIES AND EXCHANGE BOARD OF INDIA
18. Other stock exchanges could make their own
VaR calculations or freely adopt the VaR calcula-
tions available on the sites of BSE and NSE. It will
be mandatory for BSE/NSE to provide real time
Sensex/Nifty/scrip data free. It will also be man-
datory for all the stock exchanges to have real time
information of Sensex/Nifty/scrip data either
from the respective exchange or through a ven-
dor.
The stock exchanges should ensure that the above
margin structure is implemented on April 01, 2003
and the exchanges have tested the software and
remove any glitches in its operation well before
the above deadline to avoid any problems in the
live environment.
While the above risk management measures it is
expected to contain risk in the system. However,
the efficacy of the same would be dependent on
monitoring, surveillance and timely collection of
margin by the stock exchanges. For the risk con-
tainment measures to be successful, the exchanges
must continue to strengthen their monitoring and
surveillance of broker positions/client positions
vis-a-vis adequate capital/margins and adherence
to exposure limits and collection system and to
take such timely actions as are expected of them
in their functioning as public institutions and self-
regulatory organisations.
The exchanges are advised to take steps to imple-
ment the above and confirm the same to SEBI
before March 31, 2003.
Ref: Circular No. SMD/Policy/Cir-9/2003
dated March 11, 2003.
III. Cancellation of Certificate of
Registration of brokers
This is issued to streamline the process of cancel-
lation of registration certificates granted to bro-
kers under Regulation 6 of the SEBI (Stock-bro-
kers and Sub-brokers) Regulations, 1992 in case
of surrender of membership. In case the rules/
bye-laws of your exchange provide for surrender
of membership and you accept such surrenders
after following due process, you are requested to
■ PART 3 ■ MARCH 2003 ■ 48
 CIRCULARS & GUIDELINES
follow the following procedure for the purpose of
cancellation of certificate of registration.
2. You should send a communication to SEBI re-
questing for issue of “No Due Certificate” and can-
cellation of certificate of registration of the bro-
ker, with a confirmation that as on the date of
communication,
a. the broker, as a member of your exchange,
does not owe any amount to SEBI,
b. the broker has been disabled from trading on
your exchange,
c. the broker is not connected with any of the
defaulting members of any exchange,
d. the broker has submitted an undertaking to
the exchange that he would be liable for all
liabilities/obligations (including monetary
penalties, if any) for violation of provision of
the SEBI Act and the SEBI (Stock-brokers
and Sub-brokers) Rules and Regulations,
1992.
e. no complaint/arbitration/disciplinary pro-
ceeding is pending against the broker, and
f. no investigation/inquiry by any exchange is
pending against the broker.
This communication should be accompanied by
i. the original certificate of registration for can-
cellation (indemnity on stamp paper of appro-
priate value in case certificate is lost),
II. Price Scanning Range and Volatility During the Previous Month:
Name of the Average Maximum Minimum
underlying scanning scanning scanning
range (in % range (in % range (in %
terms) terms) terms)
3. Table III showing the compliance of the eligibil-
ity criteria of the stocks on which futures and
options are traded shall be replaced with the
following tables:
SEBI BULLETIN ■ VOL. 1
45
ii. the turn over details in compliance with the
circular dated September 30, 2002, as modi-
fied from time to time, and
iii. a confirmation on points (a) to (f).
3. Based on the information and documents avail-
able with SEBI, it may cancel the certificate of
registration and issue No Due Certificate, subject
to the condition that the broker/exchange remits
the fees, that may accrue from the date of your
communication till the date of cancellation of reg-
istration by SEBI and subject to furnishing an
undertaking to pay any fees/interest to be pay-
able by such member as and when called from by
SEBI to pay. Until SEBI’s dues are fully paid, the
security deposit of the member should not be re-
leased by the exchange.
Ref: Circular No. SMD/NDC/MSS/3998/2003
dated March 11, 2003
IV. Monthly Reporting Format
As the risk containment measures and eligibility
criteria for selection of stocks for derivatives trad-
ing have undergone a change, the monthly report-
ing format stands modified in the following as-
pects:
1. Trading Statistics as given in Table I shall be
given for Futures and Options contracts traded
on all stocks and indices.
2. Table II giving the details of the Price Scanning
Range shall now be replaced with the following
table and the information shall be given for all
derivative contracts traded in the exchange.
Average Maximum Minimum Impact Cost
volatility volatility volatility for the current
(in % (in % (in % month (in %
terms) terms) terms) terms)
III. Compliance of the eligibility criteria of the
stocks from amongst top 500 stocks in terms of
average daily market capitalisation and average
daily traded value in the previous six months
■ PART 3 ■ MARCH 2003 ■ 49
 46 SECURITIES AND EXCHANGE BOARD OF INDIA

A. Applicability of the Eligibility Criteria for Stocks on which Derivatives are Traded
Name of the Quarter Whether the If no, for If the stock has not
underlying on Sigma order stock is how many been eligible for 3
which Futures size (Rs.) fulfilling the consecutive months consecutively
and options are eligibility months has including the current
available for criteria in the the stock month, state the
trading current month? not been action taken
(Y/N) eligible?

B. Median Quarter Sigma Order Size for other Stocks

Name of the stock (list Median Quarter sigma Whether the stock Number of months
all stocks from amongst order size required to is eligible for the scrip has been
the Top 500 stocks in cause a change in the derivatives trading eligible
terms of average daily stock price equal to in the current month?
market capitalization and one-quarter of a (Y/N)
average daily traded value standard deviation
in the previous six months) over the last six
months

The stock exchanges are requested to submit the
modified Monthly Activity Report after incorpo-
rating the above changes starting from the
monthly report for the month of March 2003.
Ref: Circular No. SMD/DC/5413/2003 dated
March 12, 2003.
V. Electronic Data Information
Further, any new company which gets listed in the
exchanges shall also be required to upload finan-
cial statements/documents on-line in the EDIFAR
web site.
The stock exchanges are advised to communicate
the above decisions to the notice of the compa-
nies mentioned in the list and to further advise
them about the filing on EDIFAR web site.

Filing and Retrieval Ref: Circular No. SMD/Policy/Cir - 10/2003

SEBI vide circular SMD/Policy/Cir-17/2002 dated
July 03, 2002 provided that the list of companies
which are required to file documents/statements
on-line shall be specified by SEBI from time to
time. In view of the above, it has now been de-
cided to make the requirement of filing of specific
documents/statements applicable to further 500
companies, selected on the basis of market capi-
talization and turnover. These companies would
be required to upload all the Statements/Infor-
mation as mentioned in our circular SMD/Policy/
Cir-13/2002 dated June 20, 2002, on the EDIFAR
web site with effect from quarter ending March
30, 2003.
SEBI BULLETIN ■ VOL. 1
dated March 17, 2003.
VI. Unique Client Code for
Mutual Funds and FIIs
This circular is being issued in exercise of powers
conferred by section 11(1) of the Securities and
Exchange Board of India Act, 1992, read with sec-
tion 10 of the Securities Contracts (Regulation) Act
1956, to protect the interests of investors in secu-
rities and to promote the development of, and to
regulate the securities market.
Please refer to SEBI circular No. SMDRP/
POLICY/CIR-5/2003 dated February 12, 2003
■ PART 3 ■ MARCH 2003 ■ 50
 CIRCULARS & GUIDELINES
regarding the activity schedule for the implemen-
tation of the T+2 rolling settlement at the ex-
changes w.e.f. April 01, 2003 and Para No. 6 of the
circular relating to client code.
As agreed, in the meeting with stock exchanges,
depositories, market participants and RBI held on
March 24, 2003 to take stock of the preparedness
of the exchanges, depositories and the market
participants in implementing the T+2 rolling settle-
ment, it has been decided that the exchanges
would generate a unique code for Mutual Funds
and each scheme of a Mutual Fund, Foreign Insti-
tutional Investors (FIIs) and their sub-accounts.
As this would require the exchanges to put in place
adequate systems and carry out software changes,
the exchanges are provided with three months
time to implement the system. Till such time the
present practice of putting client IDs at the time
of order entry in case of FIIs and mutual funds
shall continue.
SEBI BULLETIN ■ VOL. 1
47
The exchanges are directed to make necessary
amendments to the bye-laws, rules and regulations
for the implementation of the above decision im-
mediately.
The exchanges are directed to bring the provisions
of this circular to the notice of the member bro-
kers/clearing members of the exchange and also
to disseminate the same on the website for easy
access to the investors.
The exchanges are also directed to communicate
to SEBI, the status of the implementation of
the provisions of this circular in Section II, item
No. 13 of the Monthly Development Report for the
month of March 2003.
Ref: Circular No. SMD/SE/11/2003/31/03
dated March 31, 2003.
■■
■ PART 3 ■ MARCH 2003 ■ 51
 48
Notifications
I. Supersession of Governing Board
THE GAZETTE OF INDIA
EXTRAORDINARY
PART - II SECTION - 3 SUB-SECTION (ii)
PUBLISHED BY AUTHORITY
SECURITIES AND EXCHANGE BOARD OF INDIA
NOTIFICATION
Mumbai, the 25th day of March, 2003
Order under Section 11 of the Securities Contracts
(Regulation) Act, 1956 Superseding the Govern-
ing Board of Ahmedabad Stock Exchange—
S.O. 314 (E). In the course of Annual Inspection of
the Ahmedabad Stock Exchange (hereinafter re-
ferred to as “ASE”) conducted by the Securities
and Exchange Board of India (hereinafter referred
to as “SEBI”) on August 05, 2002, it was, inter alia,
observed that members of ASE were carrying on
unofficial trading in securities in the Stock Ex-
change premises. Thereupon, vide letter dated
August 26, 2002, SEBI advised ASE to take imme-
diate steps to stop the unofficial trading in securi-
ties and to investigate and take necessary steps
against members of the exchange who were in-
volved in the said trading. SEBI also advised ASE
to submit a report on the action taken by them.
ASE vide letter dated August 30, 2002, informed
that they are initiating enquiry into the matter and
shall submit a report in the matter. ASE also in-
formed that they have issued a circular warning
members to refrain from unofficial trading. Sub-
sequently, on September 17, 2002, ASE submitted
a report on the unofficial trading to SEBI. The said
report of ASE was annexed as Annexure A to the
Show-Cause Notice dated 25.9.2002.
2.0 The said report of ASE dated September 17,
2002, stated that:
(a) There is no unofficial market operational
within the official premises of the Stock Ex-
change, Ahmedabad and that there is no as-
sembly of members/non-members either
during the trading hours or after closure of
the trading session for any such activity.
SEBI BULLETIN ■ VOL. 1
SECURITIES AND EXCHANGE BOARD OF INDIA
(b) In one open space in
Kamadhenu Com-
plex, Panjarapole,
where the Stock Ex-
change is located,
there is a regular as-
sembly of persons af-
ter close of trading
session.
(c) An official of the exchange deputed to observe
the activities during the unofficial trading
session reported that -
- members of their exchange were not
participating in the unofficial market
- a number of other persons who are not
connected with the exchange do partici-
pate in the said market
- the duration of the session is around one
hour everyday and the process of settle-
ment among participants is payment and
receipt in cash directly.
(d) The reasons for participation by persons in
such unofficial market was stated to be -
- They have no access to the equity and
derivatives market.
- They want to avoid the cost of transac-
tion, margining and risk management.
- They have confidence in each other and
hence have no problem in settlement.
- They are not registered with SEBI as
stock brokers or sub-brokers and so are
able to avoid all regulatory compliance.
- Option contracts are not available in ASE
whereas these persons have been oper-
ating a unique type of options contract
called “phatak”.
(e) The unofficial market is not carried on for
purchase or sale of securities and is therefore
not reflected in the equity trading system of
■ PART 3 ■ MARCH 2003 ■ 52
 NOTIFICATIONS
the exchange at any time. The options con-
tracts are not settled by way of delivery,
rather, they are always settled by way of price
difference in cash. These contracts are not
identical or similar to regular purchase and
sale of shares and therefore there is no threat
to market integrity.
(f) The trading methodology of the unofficial
market is termed in the local language as
“Phatak” which means derivatives contracts
and “Phatak” consists of three different types
of transactions namely - Jota, Bhav Bhav and
Teji Mandi.
3.0 Subsequently, on September 19, 2002, SEBI
conducted a surprise inspection of ASE. The in-
specting officer of SEBI observed that an unoffi-
cial market in an open outcry fashion was being
held within the stock exchange premises and mem-
bers of the exchange were also participating in the
same. When confronted by the inspecting officer
with the observation that unofficial trading was
going on in the premises of the exchange by the
members of the exchange, the Executive Director
of ASE issued a letter to SEBI on the same day
confirming that an unofficial market for Jota
Phatak was going on as observed by him also on
that day.
3.1 In his report dated September 20, 2002 (an-
nexed as Annexure B to the Show-Cause Notice
dated 25.9.2002) the inspecting officer has men-
tioned that:
(a) ASE has not taken any steps to stop the unof-
ficial market despite instructions from SEBI
vide letter dated August 26, 2002.
(b) ASE has submitted a false report to SEBI vide
their letter dated September 17, 2002 that -
- The unofficial market was not conducted
within the official premises of the Stock
Exchange
- Members of ASE are not participating in
such unofficial market
4.0 Thereafter, vide letter dated September 20,
2002, ASE informed SEBI that they have lodged a
complaint with the Ellis Bridge Police Station with
a request to do the needful to prohibit the illegal
SEBI BULLETIN ■ VOL. 1
49
transactions. However, they failed to confirm that
unofficial trades in the premises of the stock ex-
change were prohibited.
5.0 Besides the failure to prohibit unofficial trad-
ing, in a matter where SEBI had initiated Enquiry
proceedings against 20 brokers for indulging in
unauthorized carry forward transactions, ASE
referred the matter to the Disciplinary Action
Committee and levied a penalty of Rs.1000.00 each
on them.
6.0 In view of the report of the inspecting officer
and the failure of ASE to curb the unofficial trad-
ing in the premises of the stock exchange, a show-
cause notice was issued on September 25, 2002
under section 11 of the Securities Contracts (Regu-
lation) Act, 1956 (hereinafter referred to as
“SCRA”) to the Governing Board of ASE advising
them to show cause why appropriate action in-
cluding supersession should not be taken against
them. Alongwith the said show-cause notice the
report of the ASE, the report of the inspecting of-
ficer submitted on 20.09.2002, SEBI warning let-
ters dated April 24, 2002 and July 05, 2002 (an-
nexed as Annexure C and Annexure D to Show
Cause Notice 25.9.2002) were also sent to the Gov-
erning Board of ASE.
7.0 The Governing Board of ASE submitted their
reply to the said show-cause notice vide their let-
ter dated October 9, 2002. In the reply, they stated
inter alia that:
(i) In order to prevent any unofficial transactions
within the vicinity of the exchange, ASE has
filed a police complaint and requested police
authorities to take appropriate action under
law to prohibit such illegal activities relating
to unofficial transactions.
(ii) The exchange has taken due precaution to
prevent any unofficial transactions within the
premises of the exchange.
(iii) In order to have an impartial check on the
behaviour of members as well as their finan-
cial transactions, the governing board in its
meeting held on 26.7.2002 decided to conduct
inspection of accounts of the members by
M/s C R Sharedalal & Co who are indepen-
dent auditors.
■ PART 3 ■ MARCH 2003 ■ 53
 50
(iv) They do not have any concrete evidence of
the participation of brokers of their exchange
in the unofficial market within the official
premises of the stock exchange.
(v) The decision to impose penalty on the 20 bro-
kers against whom Enquiry has been initiated
by SEBI was taken by the Disciplinary Action
Committee. However, the Governing Board
will be more vigilant in future.
(vi) ASE has not obtained permission to trade in
derivatives and therefore have not launched
trading in derivatives. They do not offer fa-
cility to trade in derivatives either to mem-
bers or non-members. Further, ASE ensures
that none of the floor transactions entered
into outside the premises can be entered in
the trading system of ASE because of the
price-time priority maintained by the system.
7.1 In view of the above, ASE have submitted that
they have taken sufficient precautions to stop the
unofficial trading in securities by virtue of which
such trading has practically stopped, that trading
in derivatives is not carried out in ASE and there-
fore, there is no violation of the SCRA, that no
undesirable transactions in securities are being
carried out to the knowledge of the Governing
Board of ASE and hence they have submitted that
they have never allowed any such transaction.
8.0 The Governing Board of ASE also sought a
personal hearing before me in this regard. Personal
hearing was granted to members of the Govern-
ing Board on November 20, 2002. They submitted
in their reply dated 9.10.2002 that they have filed
a police complaint and are taking all necessary
action to prohibit unofficial trading in securities.
In view of the submission made by the Governing
Board in their reply that unofficial trading had
stopped, an inspection team was deputed by SEBI
on November 15, 2002, to confirm the veracity of
the said submission. The inspecting team during
the inspection on 15.11.2002 found that an open
outcry system of trading was being carried out by
members at the basement and near HDFC Bank
in the premises of ASE. The members of the said
inspecting team were present during the personal
hearing as on 20.11.02 before me in case the mem-
SEBI BULLETIN ■ VOL. 1
SECURITIES AND EXCHANGE BOARD OF INDIA
bers of the Governing Board desired to put any
questions to the said inspecting team. The inspect-
ing team stated before me and members of the
Governing Board that during the said inspection
on 15.11.2002, they had observed that unofficial
trading was taking place in the premises of ASE
even during trading hours. It was submitted on
behalf of the Governing Board that the alleged
transactions were outside the stock exchange and
it was not possible for them to monitor the same.
9.0 I find that unofficial trading in the premises of
ASE was observed during inspections carried out
by SEBI on 5.8.02 and 19.9.02 the same was also
corroborated by the Executive Director of the
stock exchange vide his letter dated 19.9.02. The
same was brought to the notice of officials of ASE
and they were advised to take steps to prohibit
the same. The Officials of ASE promised to take
steps to curb the unofficial trading and in their
reply dated 9.10.2002, the Governing Board stated
that the exchange has taken due precaution to
prevent any unofficial transactions within the pre-
mises of the exchange. They have also stated that
they do not have any concrete evidence of partici-
pation of their members in the unofficial market
and that the exchange has put in place a strong
mechanism to prevent and curb any such prac-
tices and that the said unofficial trade has practi-
cally stopped. However, the inspection team de-
puted by SEBI during their visit to the Exchange
premises on 15.11.2002 observed that unofficial
trading in open outcry system was taking place in
the premises and that members of the exchange
were involved in the same.
10.0 In this regard, it would be appropriate to re-
fer to relevant provisions of the law. Section 16 of
the SCRA provides that:
“16(1) if the Central Government is of the opin-
ion that it is necessary to prevent undesirable
speculation in specified securities in any state
or area, it may by notification in the official
gazette declare that no person in the state or
area specified in the notification shall, save with
the permission of the Central Government (or
SEBI/RBI), enter into any contract for the sale
or purchase of any security specified in the
■ PART 3 ■ MARCH 2003 ■ 54
NOTIFICATIONS
notification except to the extent and in the
manner, if any, specified therein.
(2) All contracts in contravention of the provi-
sions of sub-section (1) entered into after the
date of notification issued thereunder shall be
illegal.”
In accordance with the above, a notification
No. SO 184(E) was published in the Gazette of
India on March 01, 2000 stating that
“in exercise of the powers conferred by sub-
section (1) of section 16 of the Securities Con-
tracts (Regulation) Act, 1956 read with Gov-
ernment of India Notification No. 573(E) dated
30th July, 1992 and Notification No. 183 (E)
dated 1st March, 2000 issued under section 29A
of the said Act, the Securities and Exchange
Board of India (hereinafter referred to as “the
Board”) being of the opinion that it is neces-
sary to prevent undesirable speculation in se-
curities in the whole of India, hereby declare
that no person in the territory to which the said
Act extends, shall, save with the permission of
the Board, enter into any contract for sale or
purchase of securities other than such spot
delivery contract or contract for cash or hand
delivery or special delivery or contract in de-
rivatives as is permissible under the said Act
or the Securities and Exchange Board of
India, Act, 1992 and the Rules and Regulations
made under such Acts and Rules, Regulations
and Bye-laws of a recognized Stock Exchange:
Provided that any contract for sale or purchase
of government securities, gold related securi-
ties, money market securities and ready for-
ward contracts in debt securities entered into
on the recognized stock exchange shall be en-
tered into in accordance with -
(a) the rules or regulations or the bye-laws
made under the Securities Contracts
(Regulations) Act, 1956 (42 of 1956) or
the Securities and Exchange Board of
India Act, 1992 (15 of 1992) or the direc-
tions issued by the Securities and Ex-
change Board of India under the said
Acts;
SEBI BULLETIN ■ VOL. 1
51
(b) the rules made or guidelines or directions
issued under the Reserve Bank of India
Act, 1934 (2 of 1934) or the Banking
Regulation Act, 1949 (10 of 1949) or the
Foreign Exchange Regulation Act, 1973
(46 of 1973) by the Reserve Bank of In-
dia;
(c) The provisions contained in the notifica-
tions issued by the Reserve Bank of In-
dia under the Securities Contract (Regu-
lations) Act, 1956 (42 of 1956)”
10.1 I also find that ASE in its letter dated Sep-
tember 17, 2002 has admitted to an unofficial
market in derivatives also being carried on in the
premises of the Stock Exchange. In their complaint
to the Ellis Bridge Police Station dated 20.9.2002,
the stock exchange has mentioned that some un-
scrupulous persons are carrying out illegal trans-
actions in securities within the premises of the
stock exchange and that the same is a cognizable
offence under the SCRA. In this regard, Section
18A of the SCRA states that notwithstanding any-
thing contained in any other law for the time be-
ing in force, contracts in derivatives shall be legal
and valid if such contracts are: (a) traded on a rec-
ognized stock exchange; (b) settled on a clearing
house of the recognized stock exchange in accor-
dance with the rules and bye-laws of such stock
exchange.
10.2 I find that the unofficial market was carried
on in the premises where ASE is located in con-
travention of the provisions of Sections 16 and 18A
of the SCRA. I find that although in their reply
dated 9.10.2002, ASE has submitted that they have
taken all necessary steps to prevent any illegal trad-
ing, during the inspection by SEBI officials on
15.11.2002 it was observed that the illegal trading
was still being carried on. By allowing the unoffi-
cial trade to continue despite directives from SEBI
to prohibit the same, ASE has failed to ensure com-
pliance with the said provisions of SC(R)A. The
submission that it is not possible for ASE to moni-
tor such transactions as it is outside the stock ex-
change is not tenable. The finding in preceding
paras, particularly in para 9.0 shows that unoffi-
cial transaction was taking place in within the pre-
■ PART 3 ■ MARCH 2003 ■ 55
 52
mises of the exchange and some of the members
were also involved in the same. Even if it is pre-
sumed as contended by noticees that such trans-
actions were outside the stock exchange, in view
of the provisions of Sections 16, 18A, 19 of SC(R)
Act and notification issued under Section 16, it is
the duty of the Exchange to prevent such trans-
actions.
11.0 I find that the exchange has not complied with
the directives/circulars etc. of SEBI within the
stipulated time-frame and has shown disregard to
deadlines set by SEBI in complying with its direc-
tives. In this regard, I also note that SEBI has is-
sued two warning letters dated April 24, 2002 &
July 05, 2002 in the current financial year for non
implementation of system based gross margin in
cash market and disruption in trading.
12.0 I find that ASE failed to comply with the or-
der issued by SEBI under section 8 of SC(R) Act
dated January 10, 2002 wherein the exchange was
directed to amend their Rules, Articles etc. within
a period of two months to give effect to the segre-
gation of ownership and trading membership from
management of stock exchange. Thereupon SEBI
was constrained to amend the rules of ASE vide
notification dated April 16, 2002 to give effect to
the same.
13.0 It may be observed that the Joint Parliamen-
tary Committee in its report which was laid be-
fore Parliament on 19.12.2002, has also observed
that illegal financing in various forms appear to
be resurfacing in exchanges like Ahmedabad. Syn-
chronized deals and gathering of brokers at fixed
time on a particular day in a week in trading hall
of the exchange/corridors of the exchange to fix
badla charges is common knowledge. There is
need for SEBI to take immediate action.
14.0 I find that no effective steps have been taken
by the Governing Board in respect of filing an FIR
before the Police Authorities and in taking disci-
plinary action against members of the exchange
found to be involved in the unofficial transactions.
ASE, vide their letter dated 30.12.2002, sent in re-
ply to SEBI’s letter dated 23.10.2002, have stated
that when the ED of the Stock Exchange met the
Station in charge (SHO) of Ellis Bridge Police Sta-
SEBI BULLETIN ■ VOL. 1
SECURITIES AND EXCHANGE BOARD OF INDIA
tion to convert their complaint into an FIR, the
SHO advised them to submit a detailed note on
the relevant sections under which the FIR should
be registered and also to explain whether such
offence is cognizable under Law. The ED also
stated that he would be able to forward the copy
of FIR registered with the Police to SEBI latest by
01.01.2003. However, the copy of the FIR is yet to
be received by SEBI.
The ED in his letter has also stated that it would
be difficult to initiate any disciplinary proceedings
against persons found to be standing in the corri-
dor of the stock exchange on 19.09.2002, since
there was a lack of identification and evidence. In
this regard, I note that the ED in his letter dated
19.09.2002 had stated that among other persons a
few brokers were also found to be standing in the
corridor where the unofficial market for trading
jota phatak contracts was going on.
It is evident from the above that the stock ex-
change authorities and the Governing Board have
failed to effectively follow up the complaint with
the police to ensure action against persons in-
volved in the illegal transactions and also failed to
ensure that appropriate disciplinary action is taken
against members of the stock exchange who were
found to be involved in the said illegal transac-
tions.
15.0 In view of the above facts, I am convinced
that the Governing Board of ASE has failed to
ensure proper governance and implementation of
the provisions of the SCRA and SEBI directives.
16.0 The Governing Board of ASE has been in-
formed that unofficial trading is being carried on
in and near to their premises. One step which the
ASE has taken is to inform the police. During the
hearing also, on behalf of ASE it was mentioned
that beyond this what could they do to curb the
unofficial badla? If SEBI has to make suggestions
and bring it to the notice of the exchange that
unofficial badla is being carried on in or near to
their premises, then surely, it is possible for a stock
exchange which is a regulatory body to regulate
and control the contracts under SC(R) Act and bye
laws of the Exchange to ensure that such activi-
ties are not carried on in their vicinity. The Stock
■ PART 3 ■ MARCH 2003 ■ 56
 NOTIFICATIONS
Exchanges need to put security guards in place,
have continuous monitoring by dedicated offic-
ers, warn brokers, take action, all to ensure that
there is no unofficial badla. A Governing body
which cannot even think of ways and means to
ensure that illegal activities are not being carried
on does not deserve to continue. Unofficial badla
works not only to the detriment of stock brokers,
but also to the detriment of investors and the se-
curities market. Therefore, I am of the opinion that
it is essential that immediate measures are taken
to ensure the safety and integrity of the market
and to restore the confidence of investors in the
functioning of the Stock Exchange.
17.0 SEBI is mandated to ensure that the systems
and the procedures on an exchange are such that
the transactions are carried on in a lawful man-
ner and without affecting the interest of investors.
In order to ensure that such systemic improve-
ments take place on ASE it is necessary that the
persons who have failed to take effective action
SEBI BULLETIN ■ VOL. 1
53
need to be excluded from governance of the ex-
change and an independent and impartial person
is appointed.
18.0 In view of the above and in exercise of the
powers conferred on me under Section 11 of the
Securities Contracts (Regulation) Act, 1956 read
with Government of India Notification No. S.O.573
dated July 30, 1993 and Section 4(3) of the Securi-
ties and Exchange Board of India Act, 1992, I
hereby supersede the Governing Board of
Ahmedabad Stock Exchange with effect from
March 25, 2003 for a period of one year and ap-
point Shri P K Ghosh as an administrator to exer-
cise and perform all the powers and duties of the
Governing Board. Shri P K Ghosh may take the
assistance of such persons as he deems necessary
in discharge of his duties as administrator.
[F. No. SEBI/LE/2096/03]
G. N. BAJPAI
Chairman
■■
■ PART 3 ■ MARCH 2003 ■ 57
 54
Securities Appellate Tribunal Orders
The gist of important orders delivered by the Se-
curities Appellate Tribunal (SAT) during March
2003 is as follows:
I. Appeal No. 40/2001 in the matter of NEPC
India Limited and Others Vs. SEBI
T
his appeal was directed against the
Respondent’s order dated 2.7.2001. By the
said order S/Shri Ravi Prakash Khemka,
Raj Kumar Khemka, Ratan Kumar Khemka,
Tirupathi Kumar Khemka and Madhu Sudan
Khemka (the acquirers) along with their group
companies were debarred from accessing the capi-
tal market for a period of 5 years. The order was
issued under section 11B read with section 4(3)
and section 27 of the Securities and Exchange
Board of India Act, 1992 (the Act).
The acquirers in the wake of substantial acquisi-
tion of shares/control of M/s. Damania Airways
Ltd. (name changed to Skyline NEPC Ltd.), as re-
quired under the provisions of the Securities and
Exchange Board of India (Substantial Acquisition
of Shares and Takeovers) Regulations, 1994 (Take-
over Regulations) made a public announcement
to acquire 64,66,800 fully paid up equity shares of
Rs.10 each representing 20% of the voting capital
of Skyline NEPC Ltd. The offer was to remain open
from 1.2.1996 to 29.2.1996. The offer price was
Rs.35.25 per share. The total consideration pay-
able for 64,66,800 shares was Rs.22.80 crore. The
offer closed on 29.2.1996. Pursuant to the offer,
several shareholders of the said company offered
the shares held by them. In terms of regulation
22, person(s) acquiring shares is required within a
period of four weeks from the date of closure of
the offer to complete all procedures relating to the
offer including payment of consideration to the
shareholders who have accepted the offer. How-
ever, a number of shareholders did not receive the
consideration for the shares tendered by them in
response to the public offer made by the acquirers.
Even though the acquirers had promised to pay
the purchase consideration to the shareholders
SEBI BULLETIN ■ VOL. 1
SECURITIES AND EXCHANGE BOARD OF INDIA
by 28.3.1996, they failed to
do so. They sought time by
45 days to make balance
payments by writing to the
Respondent on 22.5.1996.
The Respondent informed
them that there was no
provision in the Takeover
Regulations, for extending
time for making payments and directed to com-
plete the payment due to the shareholders and also
to pay interest @ 15% for the period of delay. But
the acquirers failed to comply with the said direc-
tions. It was in the said context that the Respon-
dent passed the impugned order. Since the Re-
spondent treated the Appellants also as default-
ers, they filed the present appeal claiming to be
aggrieved by the Respondent’s order.
While upholding the impugned order the SAT
made the following observations:
i. The failure to pay the purchase consideration
for the shares purchased from the sharehold-
ers who responded to the public offer is a very
serious charge which tantamounts to cheat-
ing. Criminal law is not short of provisions to
deal with matters of cheating deceiving etc.
It is not known as to what action the Respon-
dent has taken against those responsible for
the same. It is also noted that the payment
was due to the shareholders on 28.3.1996!
Seven years are over by now. However, since
it is not a matter which the Tribunal is called
upon to adjudicate in the present appeal, I
refrain from making any observation thereon.
ii. The consequences of the impugned order are
serious. But then, there is no doubt in my
mind in the facts and circumstances of the
case as emerged in the proceedings, that se-
vere deterrent action is called for against
those who caused grief to the gullible inves-
tors. Shareholders have been taken for a ride.
It is noted that the five acquirers referred to
■ PART 3 ■ MARCH 2003 ■ 58
LEGAL ROUND UP
in the Respondent’s order have decided not
to contest the order in the appeal. They have
thus impliedly accepted the finding arrived
and the decision made by the Respondent in
the impugned order.
iii. The basic question which requires to be con-
sidered is as to whether the show-cause no-
tice served on the five acquirers can be
treated as sufficient notice to the Appellants.
In this context it is noted that in the letter of
offer the five persons have been shown as
offerors. These five offerors are in the admin-
istration and management of the Appellants.
It is seen that the five acquirers are in the
Board of Directors of the three Appellants. It
is also seen that despite the claim that the
Appellants were not served with any show-
cause notice by the Respondent, the Appel-
lants had challenged the show-cause notice
dated 14.3.1997 issued by the Respondent in
a Writ Petition in the Hon’ble Madras High
Court. This goes to prove that the Appellants
were fully aware of the said show-cause
notice. ………….. Therefore, it is clear that the
Appellants were aware that in the absence of
any extended stay, they were exposed to fur-
ther proceedings pursuant to the said notice
and they could have, if they so desired, based
on the knowledge of the show-cause notice
which they opted to challenge by filing W.P.,
represented before the Respondent. But they
deliberately opted to keep quiet.
iv. It is seen from the impugned order that there
is enough material to show that the “direct-
ing mind and will” of the Appellants was the
acquirers on whom the notice was served.
Since the Appellants were aware of the no-
tice and that the notice referred to the names
of the parties to whom the consequences
would visit, and that since the Appellants’
names were there, it was for the Appellants
to participate in the proceeding and put forth
their defence. It is seen from the order that
none of the noticees formally responded to
the notice by filing specific replies and that
could be the reason for the Appellants’ non-
SEBI BULLETIN ■ VOL. 1
55
participation in the proceedings before the
Respondent.
v. I do not consider that by not addressing the
notice specifically to the Appellants, any preju-
dice has been caused to the Appellants. The
fact is that despite the clear knowledge of the
notice, the Appellants preferred to abstain
from the proceedings. It was not that they
were unaware of the charges. For the reasons
best known to them they decided not to par-
ticipate in the proceedings, though they pre-
ferred to challenge the notice before another
forum - Hon’ble Madras High Court. The or-
der arising out of the adjudication of the
show-cause notice was also challenged by
them in the present appeal. But they did not
consider it necessary to answer the show-
cause notice!
vi. The Hon’ble Supreme Court in Managing Di-
rector ECIL v. B. Karunakar (1993) 4 SCC 727
observed in the context of a challenge made
alleging non-compliance of the principles of
natural justice in a domestic enquiry on the
ground that the enquiry report was not made
available to the delinquent officer, that the
Court or Tribunal should not mechanically
set aside the order of punishment on the
ground that the report was not furnished.
Whether in fact prejudice has been caused
to an employee or not on account of the de-
nial to him of the report has to be seen and
considered on the facts and circumstances of
each case. Where even after furnishing the
report, no different consequence would have
followed, the court observed, it would be a
perversion of justice to permit the employee
to resume duty and get all the consequential
benefits. It amounts to rewarding the dishon-
est and the guilty and thus to straighten the
concept of justice to illogical and exasperat-
ing limits. It amount to an “unnatural expan-
sion of natural justice” which in itself is anti-
thetical to justice. It is only if the Courts or
Tribunals finding that the furnishing of the
report would have made a difference to the
result in the case, that it would set aside the
order of punishment.
■ PART 3 ■ MARCH 2003 ■ 59
 56
vii. I am not stating a general principle that no-
tice to the director of a company is also no-
tice to the company in all cases. In the facts
and circumstances of the present case, there
is sufficient evidence to establish that the
notice addressed to the Appellants’ directors
had actually reached the Appellants and the
Appellants had taken cognizance of the no-
tice and acted thereon. In that view of the
matter the Appellants submission that the
impugned order was passed without notice
to the Appellants and it was in violation of the
principles of natural justice is not acceptable.
viii. Let us not forget that the soul of natural jus-
tice is “fair play in action.” The purpose of fol-
lowing the principles of natural justice is for
prevention of miscarriage of justice and
hence the observance thereof is the pragmatic
requirement of fair play in action. In the Ap-
pellants’ case from the facts of the case I find
that it was a self denial of natural justice by
the Appellants rather than the denial of natu-
ral justice by the Respondent.
ix. In the light of the proven facts of the case
that the shareholders of Damania Airways
having been deprived of the money legiti-
mately due to them, the Respondent felt that
the persons responsible for the same should
not be allowed to repeat such “performance”
and felt the need to prevent them from re-
peating such activities. With that object in
view the Respondent has issued the impugned
order, under section 11B which in my view is
a preventive measure taken to protect the
interest of the investors and therefore per-
missible in terms of section 11B.
II. Appeal No. 40/2002 in the matter of Far East
Investments Limited & Others Vs. SEBI & Oth-
ers
This appeal is directed against the order dated
24.5.2002 made by an adjudicating officer ap-
pointed by SEBI imposing a monetary penalty of
one lakh fifty thousand rupees on the Appellants,
holding them guilty of violating regulation 7 of the
SEBI (Substantial Acquisition of Shares and Take-
overs) Regulations, 1997.
SEBI BULLETIN ■ VOL. 1
SECURITIES AND EXCHANGE BOARD OF INDIA
On 13.2.2001, Far East acquired 10,00,000 shares,
out of the total of 12,13,59,000 equity shares com-
prising the paid up capital of GTB. This resulted in
Far East’s holding in GTB increasing to 5.11%. Far
East was already holding 52,00,000 shares in GTB
on 13.2.2001. European Investments was holding
52,30,000 shares representing 4.30% of the paid up
capital of GTB on 13.2.2001. The combined hold-
ing of these two companies on 13.2.2001 was
1,14,30,000 shares, which accounted for 9.42% of
the paid up capital of GTB. SEBI viewed that the
Appellants were acting in concert. In that view of
the matter SEBI felt that the Appellants were re-
quired to comply with the disclosure requirements
as per regulation 7. Regulation 7 of the Takeover
Regulations requires the acquirer acquiring more
than 5% shares in a listed company to disclose the
aggregate of his holding to the concerned com-
pany within four working days of the acquisition.
In this context, SEBI decided to refer the matter
for adjudication and for the purpose appointed an
adjudicating officer. The adjudicating officer is-
sued notice to the Appellants asking them to show
cause as to why monetary penalty as provided in
section 15A(b) of the SEBI Act, 1992 should not
be imposed on them. The Appellants responded
that they had not violated the provisions of the
Regulations/the Act. But the adjudicating officer
viewed differently. He held the Appellants guilty
of violating the provisions of regulation 7 and im-
posed one lakh fifty thousand rupees as monetary
penalty vide his order dated 24.5.2002.
While setting aside the order of the adjudicating
officer, the SAT inter alia has made following
observations:
i. It is on record that the entire beneficial inter-
est in these two companies is held by distinct
persons. This fact remains undisputed. SEBI
has not brought any evidence on record to
show that the beneficial owners of the two
companies are in any way inter related….. In
this context only on the basis of the fact that
PCL was the management company of both
the Appellants and that PCL’s directors were
the directors of the Appellants etc. by itself
does not prove that they are connected or
group companies in reality to be considered
■ PART 3 ■ MARCH 2003 ■ 60
LEGAL ROUND UP
as persons acting in concert, especially in the
light of the rebuttal made by the Appellants.
…In my view there is no evidence to show
that both the Appellants were acting in con-
cert.
ii. In that view of the matter the percentage
holding of European Investments being only
4.30% of GTB’s capital and hence below the
5% bench mark provided in regulation 7, the
said Appellant was not required to make dis-
closure under regulation 7 and as such there
was no failure on its part in this regard and
section 15A(b) did not attract. Therefore,
there is no justification for imposing penalty
on the said Appellant.
iii. As far as Far East is concerned it is on record
that it was holding 0.11% in excess over the
bench mark holding of 5% from 13.2.2001 to
7.3.2001. In this connection it is to be noted
that the excess holding was just 0.11%, that
too for a period of about 3 weeks, that ac-
cording to the Appellant immediately on re-
ceipt of information from GTB of the fact that
it was holding 0.11% in excess, the next day it
disposed of 2 lakh shares.
iv. On a perusal of the observation made by the
Adjudicating officer it is clear that he was
concerned mainly because of the 9.42% hold-
ing of shares which is far exceeding 5% pro-
vided in regulation 7 and in that context he
held the Appellants guilty. It appears that the
adjudicating officer has rightly ignored 0.11%
excess holding by itself as a failure to war-
SEBI BULLETIN ■ VOL. 1
57
rant any penalty as such, though he has re-
corded the failure on the part of the Appel-
lant to make disclosure of the same. His em-
phasis is that both the Appellants acted in con-
cert and the combined holding was in excess
by 4.42%. ….. Thus it is clear that what
weighed in the mind of the adjudicating of-
ficer was the Appellants’ holding 9.42% (i.e.
4.42% in excess of the prescribed limit) in
GTB’s capital for the purpose of imposition
of penalty and not the insignificant excess
holding of 0.11% by Far East.
v. Even if it is assumed that the Far East was
guilty of failure to disclose its holding on ac-
quiring 0.11% shares in GTB for a period of 3
weeks, still in my view taking into consider-
ation the facts of the case and the authorities
cited by both sides, it is difficult to hold that
the said failure warranted imposition of pen-
alty. There is nothing on record to show that
the Appellants “had acted deliberately in de-
fiance of law or was guilty of conduct contu-
macious or dishonest or acted in conscious
disregard of its obligation”. The failure to dis-
close the excess holding of 0.11% lasting over
a period of 3 weeks in my view has in no way
defeated the purpose of regulation 7 as stated
by the adjudicating officer in the impugned
order.
For the reasons inter alia stated hereinabove that
allowed the appeal.
The full version of these orders are available at
http://www.sebi.gov.in
■■
■ PART 3 ■ MARCH 2003 ■ 61
 58 SECURITIES AND EXCHANGE BOARD OF INDIA

Annexures

1A. Draft Offer Documents Received during

March, 2003
1B. Observations Issued on Draft Offer Docu-
ments during March, 2003
2A. Open Offers under SEBI Takeover Code dur-
ing March, 2003
2B. Buyback Announcements during March,
2003
3. Penal Orders Issued by SEBI Chairman dur-
ing March, 2003
Statistical Tables
1. SEBI Registered Market Intermediaries/Par- 18. Volatility of Major Indices
ticipants 19. City-wise Distribution of Turnover on Cash
2. Offer Documents Received and Observations Segments of BSE and NSE
Issued by SEBI 20. Advances/Declines in cash Segments of
3. Capital Raised from the Primary Market Exchanges (No. of Securities)
4. Industry-wise Classification of Capital Raised 21. Trading Frequency in cash Segment of BSE
from Primary Market and NSE
5. Sector-wise and Region-wise Distribution of 22. Percentage Share of Top ‘N’ Securities/Mem-
Capital Mobilised from the Primary Market bers in Turnover in cash Segment
6. Size-wise Classification of Capital Raised 23. Settlement Statistics for cash Segmenmt of
from Primary Market BSE
7. Growth and Distribution of Turnover on Cash 24. Settlement Statistics for cash Segment of
Segments of Exchanges NSE
8. Cash Segment of BSE 25. Derivative Segments at BSE
9. Cash Segment of NSE 26. Derivative Segments at NSE
10. Trends in Cash Segment of BSE, March, 2003 27. Derivatives Trading at BSE, March, 2003
11. Trends in Cash Segment of NSE, March, 2003 28. Derivatives Trading at NSE, March, 2003
12. Turnover and Market Capitalisation at BSE 29. Settlement Statistics in Derivative Segment
and NSE, March 2003 30. Trends in FII Investment
13. Movement of Indices at BSE, March, 2003 31. Daily Trends in Foreign Institutional Invest-
14. Movement of Indices at NSE, March, 2003 ment, March, 2003
15. BSE Sensex, March, 2003 32. Trends in Mutual Funds Resource Mobili-
16. S&P CNX Nifty, March, 2003 sation
17. Movement in DSE and MSE Share Price 33A. Scheme-wise Resource Mobilisation by
Index, March, 2003 Mutual Funds

SEBI BULLETIN ■ VOL. 1 ■ PART 3 ■ MARCH 2003 ■ 62

ANNEXURES & STATISTICAL TABLES 59
33B. Scheme-wise Resource Mobilisation by N.B.:
Mutual Funds 1. NA = Not Applicable/Available.
34. Trends in Transactions on Stock Exchanges 2. 1 crore = 10 million = 100 lakh.
by Mutual Funds
3. The total provided in the Annexures and Sta-
35. Substantial Acquisition of Shares and Take- tistical Tables may not always match with the
overs sum total of the break-ups due to decimal dif-
36. Progress of Dematerialisation at NSDL and ferences.
CDSL
37. Receipt and Redressal of Investor Grievances
38. Assets under the Custody of Custodians
39. Ratings Assigned for Corporate Debt Securi-
ties (Maturity ≥ 1 year)
40. Review of Accepted Ratings of Corporate
Debt Securities (Maturity ≥ 1 year)

SEBI BULLETIN ■ VOL. 1 ■ PART 3 ■ MARCH 2003 ■ 63

 Annexure 1A: Draft Offer Documents Received during March, 2003

Sl. No. Company Lead Manager Type of Issue Type of Issue Price (Rs.) Issue Size Promoters 60
Instrument (Face Value+ (Rs. mn.)
Premium)
1 M/s. Amtrex Hitachi M/s. Ind Global Rights Equity 10 + 21 273 *Hitachi Home & Life
Appliances Ltd. Corporate Finance Solutions Inc.
*Hitachi India Pvt. Ltd.

Annexure 1B: Observations Issued on Draft Offer Documents during March 2003

Sl. No. Company Lead Manager Type of Issue Type of Issue Price (Rs.) Issue Size Date of Final
(Pre-Issue) Instrument (Face Value+ (Rs. mn.) Observation
Premium)
Nil

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PART 3
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MARCH 2003
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SECURITIES AND EXCHANGE BOARD OF INDIA
 Annexure 2A: Open Offers under SEBI Takeover code during March, 2003*

Sl. No. Target Company Acquirer Offer Offer Closing Offer Size Offer Price
Opening Date No. of % of Equity (Rs.)
Date Shares Capital
ANNEXURES

1 M/s. BSEL Information System M/s. Contact Consultancy Services 3-Feb-03 4-Mar-03 2,030,000 10.0 18.6
Ltd. Pvt Ltd.
2 M/s. Kapil Cotex Ltd. M/s. S.R.V.Telecom Pvt Ltd. 4-Feb-03 5-Mar-03 48,000 20.0 15.0
3 M/s. Parry Agro Industries Ltd. M/s. New Ambadi Investments Pvt Ltd. 18-Feb-03 19-Mar-03 867,472 23.1 70.0
4 M/s. Shantivijay Jewels Ltd. M/s. Shri Bimalchand Godha, Rajrani 18-Feb-03 19-Mar-03 300,200 10.0 23.0
Godha, P K Godha
5 M/s. Balwas E-Com India Ltd M/s. IT People Private Ltd. 18-Feb-03 19-Mar-03 2,771,000 27.2 2.5
(Global E-Com (India) Pvt Ltd)
6 M/s. Kwality Dairy (India) Ltd. M/s. Gulshan Dhingra, Krishan Dhingra, 19-Feb-03 20-Mar-03 3,180,800 17.5 2.0
Naresh Dhingra
7 M/s. Ace India Ltd. Ved P Narula 21-Feb-03 22-Mar-03 632,180 20.0 2.7
8 M/s. MJP Leasing Ltd. M/s. Concept Communication Ltd. 25-Feb-03 26-Mar-03 47,690 20.0 20.0

SEBI BULLETIN
■
9 M/s. Eicher Ltd (Royal Enfield M/s. Eicher Goodearth Ltd. 26-Feb-03 27-Mar-03 4,047,375 20.0 30.0
Motors Ltd.)

VOL. 1
* Offers which closed during March 2003.

■
PART 3
■
Annexure 2B: Buyback Announcements during March, 2003

Sl. No. Company Mode of Buyback Maximum Maximum Date of Date of Date of
price Consideration Filing opening closing
payable (Rs.) Payable of offer of offer

MARCH 2003
(Rs. mn.)

65■
1 M/s. Sai Info Ltd. Tender Offer (10%) 12 51.50 27-Mar-03 28-Apr-03 12-May-03
61
 Annexure 3: Penal Orders Issued by SEBI Chairman during March, 2003

Sl. Order Date Name of Entity Type of Entity Violation(s) Punishment/Direction 62

No.
1 10.03.2003 Shri Basanti Lal Chairman, Mandu Created false market in the shares of Debarred from dealing in securities and
Kakrecha Industries Ltd. Mandu Industries Ltd. with a view to accessing capital market for 2 years
benefit
2 10.03.2003 Shri Madhusudan Jain Managing Director, Created false market in the shares of Debarred from dealing in securities and
Mandu Industries Mandu Industries Ltd. with a view to accessing capital market for 2 years
Ltd. benefit
3 10.03.2003 Shri Milan Shah Director, Anagram Indulged in circular and collusive trading Directed not to associate with any capital
Securities Ltd. in the scrip of Kamal Overseas Ltd. and market intermediary in any position for
attempted to defraud NSCCL 1 year without prior permission of SEBI
4 13.03.2003 M/s. Springfield Broker Violated and not complied with provisions Suspended for 1 month
Securities Ltd. of Code of Conduct
5 14.03.2003 M/s. Golden Trees CIS Failure to redress grievances of investors, Directed to wind up the existing schemes and
Plantation Ltd., to apply for registration and to file infor- refund the money alongwith returns due to
Ahmedabad mation with SEBI investors within 1 month

SEBI BULLETIN
6 20.03.2003 Prashant Jain Brokers Conducting illegal and unauthorised carry Suspended trading activities till completion

■
M/s. S. K. Jain Share forward transactions of proceedings under rule 11 of SC(R)A or
Brokers Pvt. Ltd. pendency of the enquiry under SEBI
M/s. Apoorva Securities Regulations

VOL. 1
Pradeep K. Bansal

■
M/s. Ajay Securities
Pvt. Ltd.
M/s. Sandeep Mittal &

PART 3
Co.

■
M/s. Hanupriya Securi-
ties Pvt. Ltd. Mayank
Goel
M/s. Rajratan Financial
Services Pvt. Ltd. C. M.

MARCH 2003
Sethi

■
M/s. Navin Securities

66
Deep Kumar Agarwal
M/s. Sunil Bros.
M/s. Vinod & Co.
7 24.03.2003 M/s. Janaraksha Green CIS Failed to comply with SEBI order directing Company, promoters, directors and persons
Forests Ltd. the company to refund the money collected in charge of business debarred from asso-
under the scheme ciating with any capital market inter-
mediary or activity, dealing in securities,
operating in the capital market and
accessing the capital market for 5 years
SECURITIES AND EXCHANGE BOARD OF INDIA
 Sl. Order Date Name of Entity Type of Entity Violation(s) Punishment/Direction
No.
8 25.03.2003 M/s. Toubro Infotech & Corporate, Failure to comply with provisions of SEBI Company, chairman, promoters, directors
Industries Ltd. Chairman, Disclosure and Investor Protection debarred from associating with any capital
Shri Kanwar Deep Singh Promoters and Guidelines and Companies Act market intermediary or activity and from
ANNEXURES

Shri Ravinder Singh Directors dealing in securities and access capital

Major Gurgeet Singh market for 5 years; Company directed to
Shri Sergio Coreno refund the money raised in the issue with
Shri S. L. Baluja interest at the rate of 10 per cent to investors
within 2 months
9 25.03.2003 Ahmedabad Stock Stock Exchange Failure to ensure proper governance and Superseded the Governing Board of the
Exchange implementation of the provisions of the Exchange for one year and appointed
SCRA and SEBI directives. Shri P K Ghosh as an administrator to
exercise and perform all the powers and
duties of the Governing Board
10 28.03.2003 M/s. Manyog Sub-Broker Not cautious in maintaining high standard Warned to be more cautious in its dealings
Investments Pvt. Ltd. of integrity and fairness and did not act with securities and adhere to provisions
with due skill, care and diligence in con- of SC(R)R and SEBI Act
duct of investment business

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PART 3
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MARCH 2003
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63
 Table 1: SEBI Registered Market Intermediaries/Participants

Market Participants As on 31st March 64

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Stock Exchanges (Cash Market) 21 22 22 22 22 22 23 23 23 23 23
Stock Exchanges (Derivatives Market) NA NA NA NA NA NA NA 2 2 2 2
Brokers (Cash Segment) 5,290 6,413 6,711 8,476 8,867 9,005 9,069 9,192 9,782 9,687 9,519
Corporate Brokers (Cash Segment) NA 143 616 1,917 2,360 2,976 3,173 3,316 3,808 3,862 3,835
Sub-brokers (Cash Segment) NA 202 876 NA 1,798 3,760 4,589 5,675 9,957 12,208 13,291
Brokers (Derivative) NA NA NA NA NA NA NA NA 519 705 795
Foreign Institutional Investors 18 158 308 367 439 496 450 506 527 490 502
Custodians NA NA NA NA NA NA NA 15 14 12 11
Depositories NA NA NA NA 1 1 2 2 2 2 2
Depository Participants NA NA NA NA 28 52 96 191 335 380 438
Merchant Bankers 74 422 790 1,012 1,163 802 415 186 233 145 124

SEBI BULLETIN
■
Bankers to an Issue NA NA 70 77 80 72 66 68 69 68 67
Underwriters NA NA 36 40 38 43 17 42 57 54 43

VOL. 1
■
Debenture Trustees NA NA 20 23 27 32 34 38 37 40 35
Credit Rating Agencies NA NA NA NA NA NA NA 4 4 4 4

PART 3
Venture Capital Funds NA NA NA NA NA NA NA NA 35 34 43

■
Foreign Venture Capital Investors NA NA NA NA NA NA NA NA 1 2 6
Registrars to an Issue & Share
Transfer Agents NA 100 264 334 386 334 251 242 186 161 143
Portfolio Managers 28 40 61 13 16 16 18 23 39 47 54

MARCH 2003
■
Mutual Funds NA 12 22 27 37 38 41 38 39 38 38

68
Collective Investment Schemes NA NA NA NA NA NA NA 0 0 0 0
Approved Intermediaries (Stock
Lending Schemes) NA NA NA NA 1 1 4 6 8 10 4
SECURITIES AND EXCHANGE BOARD OF INDIA
 STATISTICAL TABLES 65
Table 2 : Offer Documents Received and Observations Issued by SEBI
(Rs. mn.)

Year/Month Documents Received Observations Issued

No. Amount No. Amount
1994-95 2612 427293 1973 353723
1995-96 2523 261089 1964 248228
1996-97 787 161256 815 183733
1997-98 114 125005 103 117067
1998-99 60 48021 55 18027
1999-2000 165 89670 125 120255
2000-01 197 131756 181 111597
Apr-01 2 50026 1 142
May-01 2 126 3 53277
Jun-01 0 0 1 7
Jul-01 2 944 1 119
Aug-01 7 8033 5 7728
Sep-01 4 15084 4 953
Oct-01 2 477 2 15328
Nov-01 2 8371 0 0
Dec-01 3 667 3 8818
Jan-02 2 3561 4 421
Feb-02 4 4159 4 5488
Mar-02 4 2334 0 0
2001-02 34 93782 28 92279
Apr-02 0 0 5 4938
May-02 0 0 1 18
Jun-02 3 3299 0 0
Jul-02 2 193 1 2700
Aug-02 3 16032 0 0
Sep-02 4 29109 4 20210
Oct-02 3 215 0 0
Nov-02 2 323 3 181
Dec-02 5 20895 5 20702
Jan-03 2 323 2 762
Feb-03 3 255 2 310
Mar-03 1 273 0 0
2002-03 28 70917 23 49821

SEBI BULLETIN ■ VOL. 1 ■ PART 3 ■ MARCH 2003 ■ 69

 Table 3 : Capital raised from the Primary Market

66
(Amount in Rs. mn.)

Year/Month Total Category-wise Issue Type Instrument-wise

Public Rights Listed IPOs Equities CCPS Bonds Others

At Par At Premium

No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount
1992-93 1,016 186,906 528 60,608 488 126,298 NA NA NA NA NA NA NA NA NA NA NA NA NA NA
1993-94 1,143 243,720 773 154,491 370 89,229 451 165,084 692 78,636 608 38,076 383 92,204 1 17 9 19,912 142 93,510
1994-95 1,692 276,325 1,342 210,445 350 65,880 453 110,607 1,239 165,718 942 55,291 651 124,408 7 1,243 0 0 135 95,383
1995-96 1,725 208,037 1,426 142,395 299 65,641 368 98,795 1,357 109,241 1,181 49,582 480 97,267 8 1,452 6 20,856 63 38,881

1996-97 882 142,760 751 115,568 131 27,192 167 83,257 717 59,586 697 34,326 148 44,118 5 749 10 54,000 29 9,566
1997-98 111 45,700 62 28,619 49 17,080 59 35,224 52 10,475 64 2,714 33 16,103 3 101 4 15,500 10 11,283
1998-99 58 55,865 32 50,189 26 5,675 40 51,822 18 4,042 20 1,970 20 6,598 3 780 10 44,500 6 2,016
1999-2000 93 78,168 65 62,565 28 15,602 42 50,977 51 27,190 30 7,862 52 37,798 0 0 10 32,000 2 508
2000-01 151 61,078 124 53,784 27 7,294 37 33,854 114 27,223 84 8,178 54 24,076 2 1,421 10 27,040 1 363
Apr-01 1 52 1 52 0 0 0 0 1 52 1 52 0 0 0 0 0 0 0 0

May-01 1 510 0 0 1 510 1 510 0 0 0 0 0 0 0 0 0 0 1 510

SEBI BULLETIN
Jun-01 1 4,000 1 4,000 0 0 1 4,000 0 0 0 0 0 0 0 0 1 4,000 0 0

■
Jul-01 2 4,077 1 4,000 1 77 2 4,077 0 0 0 0 0 0 0 0 2 4,077 0 0
Aug-01 3 4,182 3 4,182 0 0 1 4,000 2 182 1 37 1 145 0 0 1 4,000 0 0

VOL. 1
Sep-01 4 10,784 1 4,000 3 6,784 4 10,784 0 0 1 68 0 0 0 0 2 6,559 1 4,158

■
Oct-01 1 190 0 0 1 190 1 190 0 0 0 0 1 190 0 0 0 0 0 0
Nov-01 4 5,634 1 4,000 3 1,634 4 5,634 0 0 1 754 1 503 0 0 2 4,377 0 0

PART 3
Dec-01 4 8,300 4 8,300 0 0 2 6,500 2 1,800 1 100 0 0 0 0 2 6,500 1 1,700

■
Jan-02 3 14,668 2 14,340 1 328 2 6,328 1 8,340 0 0 1 8,340 0 0 1 6,000 1 328
Feb-02 4 8,999 2 8,500 2 499 4 8,999 0 0 2 499 0 0 0 0 2 8,500 0 0
Mar-02 7 14,035 4 13,645 3 390 6 12,390 1 1,645 0 0 4 2,035 0 0 3 12,000 0 0
2001-02 35 75,431 20 65,018 15 10,413 28 63,413 7 12,018 7 1,509 8 11,213 0 0 16 56,012 4 6,696
Apr-02 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

MARCH 2003
■
May-02 2 2,461 0 0 2 2,461 2 2,461 0 0 0 0 2 2,461 0 0 0 0 0 0

70
Jun-02 1 2,100 1 2,100 0 0 0 0 1 2,100 0 0 1 2,100 0 0 0 0 0 0
Jul-02 2 2,078 1 2,000 1 78 2 2,078 0 0 1 78 0 0 0 0 1 2,000 0 0
Aug-02 1 2,880 1 2,880 0 0 0 0 1 2,880 0 0 1 2,880 0 0 0 0 0 0
Sep-02 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Oct-02 3 4,018 2 4,000 1 18 2 3,018 1 1,000 2 1,018 0 0 0 0 1 3,000 0 0

Nov-02 2 6,350 2 6,350 0 0 1 2,500 1 3,850 0 0 1 3,850 0 0 1 2,500 0 0

Dec-02 3 619 0 0 3 619 3 619 0 0 1 124 1 360 0 0 0 0 1 134
Jan-03 2 7,000 2 7,000 0 0 2 7,000 0 0 0 0 0 0 0 0 2 7,000 0 0
Feb-03 6 5,354 3 4,557 3 797 4 4,797 2 557 1 156 4 1,198 0 0 1 4,000 0 0
Mar-03 4 7,844 2 7,500 2 344 4 7,844 0 0 1 49 1 295 0 0 2 7,500 0 0
2002-03 26 40,703 14 36,387 12 4,312 20 30,316 6 10,387 6 1,425 11 13,144 0 0 8 26,000 2 134

Note : Instrument-wise break up may not tally to the total number of issues, as for one issue there could be more than one instruments.
SECURITIES AND EXCHANGE BOARD OF INDIA
 Table 4 : Industry-wise Classification of Capital Raised from Primary Market
(Amount in Rs. mn.)

Industry 2000-01 2001-02 2002-03 Mar-02 Mar-03

No. Amount No. Amount No. Amount
Banking/FIs 13 31,393 14 51,420 13 34427 10420 7500
Cement & Construction 2 823 2 266 1 304 0 0
STATISTICAL TABLES

Chemical 5 315 3 1,868 1 156 0 0

Electronics 4 694 0 0 0 0 0 0
Engineering 2 233 4 7,597 2 96 0 0
Entertainment 13 4,577 0 0 2 243 0 0
Finance 10 4,399 1 328 1 295 0 295
Food Processing 0 0 0 0 0 0 0 0
Health Care 4 476 0 0 2 735 0 0
Information Technology 89 8,035 6 380 3 2273 116 49

SEBI BULLETIN
■
Paper & Pulp 0 0 0 0 0 0 3500 0
Plastic 1 40 0 0 1 2175 0 0

VOL. 1
■
Power 0 0 0 0 0 0 0 0
Printing 1 108 0 0 0 0 0 0

PART 3
Telecommunication 2 9,222 1 8,340 0 0 0 0

■
Textile 0 0 2 1,264 0 0 0 0
Others 5 762 2 3,968 0 0 0 0
Total 151 61,078 35 75,431 26 40,703 14,036 7,844

MARCH 2003
71■
67
 Table 5 : Sector-wise and Region-wise Distribution of Capital Mobilised from the Primary Market
(Amount in Rs. mn.)

Year/Month Total Sector-wise Region-wise

68
Private* Public Northern Eastern Western Southern
No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount
1992-93 1,016 186,906 NA NA NA NA NA NA NA NA NA NA NA NA
1993-94 1,143 243,720 NA NA NA NA 314 58,282 94 13,521 503 145,585 232 26,332
1994-95 1,692 276,325 1,684 262,702 8 13,623 399 65,537 178 22,157 740 108,242 375 80,389
1995-96 1,725 208,037 1,718 166,388 7 41,649 467 51,092 168 14,164 680 108,113 410 34,667
1996-97 882 142,760 872 102,410 10 40,350 221 33,807 114 7,669 360 90,410 187 10,874
1997-98 111 45,700 105 38,521 6 7,179 18 3,017 26 11,642 46 23,911 21 7,130
1998-99 58 55,865 57 55,161 1 703 10 1,712 10 2,655 29 48,562 9 2,934
1999-2000 93 78,168 91 76,167 2 2,000 13 18,999 7 1,055 46 52,345 27 5,766
2000-01 151 61,078 148 58,925 3 2,152 10 2,073 9 2,403 43 41,053 89 15,546
Apr-01 1 52 1 52 0 0 0 0 0 0 0 0 1 52
May-01 1 510 1 510 0 0 0 0 0 0 1 510 0 0
Jun-01 1 4,000 1 4,000 0 0 0 0 0 0 1 4,000 0 0

SEBI BULLETIN
Jul-01 2 4,077 2 4,077 0 0 0 0 0 0 1 4,000 1 77

■
Aug-01 3 4,182 3 4,182 0 0 0 0 0 0 1 4,000 2 181
Sep-01 4 10,784 4 10,784 0 0 0 0 0 0 4 10,784 0 0

VOL. 1
■
Oct-01 1 190 1 190 0 0 0 0 0 0 1 190 0 0
Nov-01 4 5,634 4 5,634 0 0 0 0 0 0 4 5,634 0 0
Dec-01 4 8,300 3 5,800 1 2,500 0 0 2 1,800 2 6,500 0 0

PART 3
Jan-02 3 14,668 3 14,668 0 0 1 8,340 0 0 2 6,328 0 0

■
Feb-02 4 8,999 3 6,499 1 2,500 1 31 0 0 3 8,968 0 0
Mar-02 7 14,035 4 9,616 3 4,420 1 1,645 0 0 3 8,509 3 3,881
2001-02 35 75,431 30 66,011 5 9,419 3 10,016 2 1,800 23 59,423 7 4,191
Apr-02 0 0 0 0 0 0 0 0 0 0 0 0 0 0

MARCH 2003
May-02 2 2,461 2 2,461 0 0 0 0 0 0 2 2,461 0 0

■
Jun-02 1 2,100 1 2,100 0 0 0 0 0 0 1 2,100 0 0

72
Jul-02 2 2,078 1 78 1 2,000 1 78 0 0 1 2,000 0 0
Aug-02 1 2,880 0 0 1 2,880 0 0 0 0 1 2,880 0 0
Sep-02 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Oct-02 3 4,018 1 18 2 4,000 0 0 2 1,018 1 3,000 0 0
Nov-02 2 6,350 0 0 2 6,350 0 0 0 0 1 2,500 1 3,850
Dec-02 3 619 3 619 0 0 0 0 0 0 1 134 2 484
Jan-03 2 7,000 1 4,000 1 3,000 0 0 0 0 2 7,000 0 0
Feb-03 6 5,354 6 5,354 0 0 0 0 1 156 1 4,000 4 1,198
Mar-03 4 7,844 3 4,344 1 3,500 0 0 0 0 2 7,500 2 344
2002-03 26 40,703 18 18,973 8 21,730 1 78 3 1,174 13 33,575 9 5,876

*Joint Sector Issues, if any, have been clubbed with private sector for the respective period.
SECURITIES AND EXCHANGE BOARD OF INDIA
 Table 6 : Size-wise Classification of Capital Raised from Primary Market
(Amount in Rs. mn.)

Year/Month Total ≥ 10 mn. - < 50 mn. ≥ 50 mn. - < 100 mn. ≥ 100 mn. - < 500 mn. ≥ 500 mn. - < 1000 mn. ≥1000 mn.
No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount
1992-93 1,016 186,906 NA NA NA NA NA NA NA NA NA NA
1993-94 1,143 243,720 NA NA NA NA NA NA NA NA NA NA
1994-95 1,692 276,325 853 25,686 442 30,330 305 63,564 51 35,842 41 120,904
STATISTICAL TABLES

1995-96 1,725 208,037 1,066 31,830 418 28,326 175 33,438 43 29,339 23 85,105
1996-97 882 142,760 547 17,596 215 14,725 87 16,711 14 9,083 19 84,645
1997-98 111 45,700 52 1,216 26 1,766 15 3,675 6 4,204 12 34,838
1998-99 58 55,865 15 349 9 631 14 2,965 9 5,812 11 46,109
1999-2000 93 78,168 19 525 15 1,051 26 6,290 14 9,965 19 60,336
2000-01 151 61,078 66 1,859 25 1,654 34 7,640 8 5,069 18 44,856
Apr-01 1 52 0 0 1 52 0 0 0 0 0 0
May-01 1 510 0 0 0 0 0 0 1 510 0 0
Jun-01 1 4,000 0 0 0 0 0 0 0 0 1 4,000

SEBI BULLETIN
Jul-01 2 4,077 0 0 1 77 0 0 0 0 1 4,000

■
Aug-01 3 4,181 1 37 0 0 1 145 0 0 1 4,000
Sep-01 4 10,784 0 0 1 68 0 0 0 0 3 10,716

VOL. 1
■
Oct-01 1 190 0 0 0 0 1 190 0 0 0 0
Nov-01 4 5,634 0 0 0 0 1 377 2 1,257 1 4,000
Dec-01 4 8,300 0 0 0 0 1 100 0 0 3 8,200

PART 3
■
Jan-02 3 14,668 0 0 0 0 1 328 0 0 2 14,340
Feb-02 4 8,999 1 31 0 0 1 468 0 0 2 8,500
Mar-02 7 14,035 1 9 0 0 2 381 0 0 4 13,645
2001-02 35 75,431 3 77 3 196 8 1,994 3 1,767 18 71,401

MARCH 2003
Apr-02 0 0 0 0 0 0 0 0 0 0 0 0

■
May-02 2 2,461 0 0 0 0 1 286 0 0 1 2,175

73
Jun-02 1 2,100 0 0 0 0 0 0 0 0 1 2,100
Jul-02 2 2,078 0 0 1 78 0 0 0 0 1 2,000
Aug-02 1 2,880 0 0 0 0 0 0 0 0 1 2,880
Sep-02 0 0 0 0 0 0 0 0 0 0 0 0
Oct-02 3 4,018 1 18 0 0 0 0 0 0 2 4,000
Nov-02 2 6,350 0 0 0 0 0 0 0 0 2 6,350
Dec-02 3 619 0 0 0 0 3 619 0 0 0 0
Jan-03 2 7,000 0 0 0 0 0 0 0 0 2 7,000
Feb-03 6 5,354 0 0 0 0 5 1,354 0 0 1 4,000
Mar-03 4 7,844 1 49 0 0 1 295 0 0 2 7,500
2002-03 26 40,703 2 66 1 78 10 2,554 0 0 13 38,005
69
 Table 7 : Growth and Distribution of Turnover on Cash Segments of Exchanges

70
(Rs. mn.)

Stock Exchanges 1992-93 1993 - 94 1994 - 95 1995 - 96 1996 - 97 1997 - 98 1998 - 99 1999 - 2000 2000 - 01 2001 - 02 2002-03

Ahmedabad 221,830 235,400 124,517 206,262 410,653 311,168 299,278 375,656 540,355.2 146,438.4 154,586.4

Bangalore 7,300 23,160 7,120 8,970 43,890 86,370 77,490 11,150 6,000.0 700.0 0.0

Bhubaneshwar 18,986 8,141 3,026 2,109 2,306 2,025 735 681 0.1 0.0 0.0

Calcutta NA 576,410 528,720 621,490 1,054,811 1,787,788 1,728,180 3,571,667 3,550,353.0 270,747.0 65,228.0

Cochin 651 3,818 6,143 2,873 1,519 1,643 963 658 257.7 19.4 0.0

Coimbatore 269 20,518 31,918 50,070 47,983 42,738 7,690 777 0.0 0.0 0.0

Delhi 74,130 120,985 91,445 100,830 489,921 679,358 506,512 945,277 829,967.6 55,263.3 111.0

Gauhati 4,426 4,519 2,853 6,160 4,839 1,200 517 0 0.5 0.3 0.6

Hyderabad 6,760 9,845 11,605 11,073 4,800 18,609 12,699 12,365 9,777.9 412.6 45.8

ICSE NA NA NA NA NA NA NA 2,737 2,367.7 696.1 531.3

Jaipur 2,958 6,163 8,786 10,478 15,192 4,525 628 21 0.0 0.0 0.0

SEBI BULLETIN
Ludhiana 10,500 31,500 49,750 48,490 52,740 83,160 60,700 68,720 91,540.0 9,640.0 0.0

■
Madhya Pradesh 3,564 1,320 1,183 2,018 53 13 9 100 23.9 159.3 0.0

Madras 34,066 46,177 61,171 32,592 39,121 24,585 7,393 5,005 2,184.2 483.1 756.4

VOL. 1
■
Magadh(Patna) NA 19,382 7,968 16,290 27,550 3,230 6 90 15.8 1.1 1.8

Mangalore 119 1,076 615 387 3,799 3,138 112 1 0.0 0.0 0.0

PART 3
Mumbai 456,958 845,360 677,487 500,642 1,241,904 2,071,129 3,107,497 6,864,276 10,000,315.4 3,072,923.6 3,140,732.1

■
NSE NA NA 18,050 672,870 2,954,030 3,701,930 4,144,740 8,390,515 13,395,102.5 5,131,673.9 6,179,887.0

OTCEI 16 384 3,650 2,241 2,187 2,832 1,978 36,034 1,257.9 37.9 0.9

Pune 7,519 34,590 36,720 70,960 100,842 86,245 48,271 60,898 61,705.3 11,710.4 0.4

SKSE 2,650 6,136 3,291 4,525 3,950 171 0 0 0.0 0.0 0.0

MARCH 2003
■
Uttar Pradesh 55,080 67,890 79,230 123,730 160,700 152,090 184,290 238,760 251,120.0 133,490.0 147,633.5

74
Vadodara 16,810 37,510 38,550 25,190 43,440 45,770 17,490 1,590 20.0 200.0 26.0

Source : Various Exchanges

SECURITIES AND EXCHANGE BOARD OF INDIA
 Table 8 : Cash Segment of BSE
Month/Year No. of No. of No. of No. of No. of No. of Traded Turnover Average Average Demat Demat Market BSE Sensex # BSE-100 Index ##
Com- Companies Scrips Trading Scrips Trades Quantity (Rs. mn.) Daily Trade Securities Turnover Capitalisation High Low Close High Low Close
panies Permitted* Listed* Days Traded (Lakh) (Lakh) Turnover size Traded (Rs. mn.) (Rs. mn.)*
Listed* (Rs. mn.) (Rs.) (Lakh)

1992-93 2,861 0 NA 192 NA 126 35031 456958 2380 36,316 NA NA 1,881,460 4546.58 2184.67 2280.52 2048.97 988.70 1021.40
1993-94 3,585 0 NA 218 NA 123 75834 845360 3878 68,875 NA NA 3,680,710 4299.36 1980.06 3778.99 2073.32 911.53 1829.53
1994-95 4,702 0 NA 231 NA 196 107,248 677,487 2,933 34,501 NA NA 4,688,370 4643.31 3228.94 3260.96 2192.74 1570.09 1605.57
1995-96 5,603 0 NA 232 NA 171 77,185 500,642 2,158 29,219 NA NA 5,637,480 3611.56 2820.26 3366.61 1691.63 1298.02 1549.25
STATISTICAL TABLES

1996-97 5,832 0 6,663 240 6,325 155 80,926 1,241,904 5,175 80,221 NA NA 5,051,370 4131.22 2713.12 3360.89 1865.29 1202.93 1463.69
1997-98 5,853 0 6,815 244 3,971 196 85,877 2,071,129 8,488 105,848 NA NA 6,302,210 4605.41 3164.66 3892.75 2007.06 1381.59 1697.14

1998-99 5,849 0 6,969 243 4,457 354 129,272 3,107,497 12,788 87,696 NA NA 6,195,320 4322.00 2741.22 3739.96 1908.73 1226.67 1651.37
1999-00 5,815 0 8,028 251 4,330 740 208,635 6,864,276 27,348 92,704 NA NA 9,128,420 6150.69 3183.47 5001.28 3906.41 1379.71 2902.20
2000-01 5,869 0 9,826 251 3,927 1,428 258,511 10,000,315 39,842 70,023 NA NA 5,715,530 5542.81 3436.75 3604.38 3055.14 1633.90 1691.71
Apr-01 5,874 0 9,912 19 2,127 95 13,965 238,762 12,566 25,039 NA NA 5,677,287 3676.82 3096.51 3519.16 1756.14 1435.94 1682.01
May-01 5,874 0 9,972 22 2,306 120 18,125 318,683 14,486 26,637 NA NA 5,959,384 3759.96 3420.14 3631.91 1830.98 1643.80 1763.35
Jun-01 5,830 0 10,137 21 2,356 105 15,407 254,508 12,119 24,290 NA NA 5,532,300 3651.32 3287.94 3456.78 1773.78 1549.39 1630.02

Jul-01 5,830 0 10,309 22 2,485 78 9,933 172,440 7,838 22,110 NA NA 5,315,764 3513.79 3241.66 3329.28 1644.80 1523.75 1564.46
Aug-01 5,803 0 10,323 21 2,517 79 10,242 174,441 8,307 22,058 NA NA 5,230,365 3359.07 3241.12 3244.95 1591.87 1532.94 1534.73

SEBI BULLETIN
Sep-01 5,804 0 10,346 20 2,427 95 10,968 215,932 10,797 22,679 NA NA 4,562,634 3267.93 2594.87 2811.60 1542.67 1209.93 1312.50

■
Oct-01 5,805 0 10,342 21 2,548 100 12,223 219,215 10,439 21,966 NA NA 4,818,510 3083.65 2718.41 2989.35 1427.29 1257.32 1389.17
Nov-01 5,791 0 10,385 20 2,711 107 16,749 244,017 12,201 22,749 NA NA 5,357,237 3377.81 3003.95 3287.56 1605.94 1395.20 1557.01

VOL. 1
Dec-01 5,795 0 13,774 19 3,218 120 19,256 300,330 15,807 24,930 NA NA 5,323,280 3500.20 3100.57 3262.33 1693.65 1480.01 1557.22

■
Jan-02 5,796 0 8,606 23 2,000 144 21,003 391,690 17,030 27,235 NA NA 5,443,968 3466.73 3236.76 3311.03 1653.18 1547.47 1592.27

Feb-02 5,798 0 7,296 20 2,042 121 18,316 285,716 14,286 23,522 NA NA 5,967,163 3758.11 3290.00 3562.31 1813.25 1599.35 1707.72

PART 3
Mar-02 5,782 0 7,321 19 2,113 112 16,009 257,190 13,536 22,895 NA NA 6,122,241 3758.27 3454.27 3469.35 1798.34 1703.42 1716.28

■
2001-02 5,782 0 7,321 247 5,347 1,277 182,196 3,072,924 12,441 24,060 NA NA 6,122,241 3759.96 2594.87 3469.35 1830.98 1209.93 1716.28
Apr-02 5,784 5 7,394 22 2,097 135 18,340 288,745 13,125 21,388 NA NA 6,255,866 3538.49 3296.88 3338.16 1763.49 1649.32 1671.63
May-02 5,784 5 7,458 22 2,118 139 21,794 281,378 12,790 20,201 NA NA 6,050,653 3478.02 3097.73 3125.73 1735.78 1572.37 1596.71
Jun-02 5,786 5 7,579 20 2,240 129 27,134 233,198 11,660 18,054 NA NA 6,377,530 3377.88 3148.57 3244.70 1714.03 1612.40 1650.34

MARCH 2003
Jul-02 5,711 6 7,319 23 2,363 145 28,375 267,237 11,619 18,447 28,320 266,795 5,840,419 3366.74 2932.35 2987.65 1698.31 1476.18 1506.23

■
Aug-02 5,710 6 7,324 21 2,304 115 15,623 237,797 11,324 20,670 15,603 237,622 6,053,027 3185.08 2931.78 3181.23 1582.53 1482.39 1580.55

75
Sep-02 5,711 6 7,327 20 2,263 106 15,603 244,101 12,205 23,004 15,561 243,168 5,702,735 3227.62 2973.97 2991.36 1600.82 1466.76 1473.88
Oct-02 5,654 6 7,278 21 2,225 114 15,833 276,409 13,162 24,319 15,803 275,878 5,637,501 3038.92 2828.48 2949.32 1508.49 1411.32 1458.78
Nov-02 5,649 6 7,273 19 2,242 96 13,622 259,814 13,674 26,994 13,603 259,542 6,012,894 3245.98 2928.63 3228.82 1597.14 1451.53 1594.03
Dec-02 5,650 6 7,279 21 2,307 123 18,703 305,816 14,563 24,842 18,660 304,963 6,281,974 3413.83 3186.62 3377.28 1676.23 1571.27 1664.67

Jan-03 5,651 12 7,403 23 2,311 130 19,376 308,981 13,434 23,732 19,292 308,076 6,114,718 3416.92 3199.18 3250.38 1686.23 1577.91 1600.87
Feb-03 5,647 12 7,355 19 2,221 95 14,334 234,610 12,348 24,610 14,293 233,893 6,198,726 3341.61 3218.37 3283.66 1650.78 1587.74 1628.72
Mar-03 5,650 12 7,363 20 2,191 85 12,665 202,647 10,132 23,824 12,514 200,993 5,721,974 3311.57 3039.83 3048.72 1642.98 1496.59 1500.72

2002-03 5,650 12 7,363 251 2,679 1,413 221,401 3,140,732 12,513 22,226 NA NA 5,721,974 3538.49 2828.48 3048.72 1763.49 1411.32 1500.72

*At the end of the period.

# BSE Sensex commenced from January 2, 1986.
## BSE-100 Index commenced from April 3, 1984.
71

Source : BSE
 Table 9 : Cash Segment of NSE
Month/Year No. of
Com-
No. of
Com-
No. of
Com-
No. of
Trading
No. of
Com-
No. of Traded
Trades Quantity
Turnover
(Rs. mn.)
Average
Daily
Average Demat
Trade Size Securities
Demat
Turnover
Market
Capitali-
S&P CNX Nifty Index #
High Low Close
CNX Nifty Junior Index ##
High Low Close
72
panies panies panies Days panies (Lakh) (Lakh) Turnover (Rs.) Traded (Rs. mn.) sation
Listed* Permitted* Available Traded (Rs. mn.) (Lakh) (Rs. mn.)*
for
Trading* @

Nov 94-Mar 95 135 543 678 102 NA 3 1,391 18,050 170 56,310 NA NA 3,633,500 NA NA NA NA NA NA

1995-96 422 847 1,269 246 NA 66 39,912 672,870 2,760 101,505 NA NA 4,014,590 1067.49 813.12 985.30 NA NA NA
1996-97 550 934 1,484 250 NA 264 135,561 2,954,030 11,760 112,086 NA NA 4,193,670 1203.11 775.43 963.30 1208.87 907.02 1032.95
1997-98 612 745 1,357 244 NA 381 135,685 3,701,930 15,200 97,054 NA NA 4,815,030 1297.10 929.05 1116.90 1395.25 1016.65 1339.40
1998-99 648 609 1,254 251 NA 546 165,327 4,144,740 16,510 75,954 8,542 238,180 4,911,751 1247.15 800.10 1078.05 2079.10 1177.20 2069.20
1999-00 720 479 1,152 254 NA 984 242,704 8,390,515 33,030 85,244 153,772 7,117,057 10,204,257 1818.15 916.00 1528.45 5365.90 1631.90 3695.75
2000-01 785 320 1,029 251 1,201 1,676 329,536 13,395,102 533,669 86,980 307,222 12,643,372 6,578,470 1636.95 1098.75 1148.20 3771.80 1570.20 1601.80

Apr-01 790 319 1,031 19 951 114 20,782 356,160 18,750 31,133 20,735 356,051 6,537,200 1171.85 1000.10 1125.25 1638.05 1362.50 1525.20
May-01 789 318 1,030 22 954 141 25,715 483,290 21,970 34,276 25,714 483,290 5,924,370 1207.00 1096.25 1167.90 1676.25 1472.40 1627.15
Jun-01 790 292 1,001 21 963 133 22,336 427,830 20,373 32,151 21,935 426,254 5,697,965 1175.80 1060.05 1107.90 1638.90 1397.60 1415.40
Jul-01 785 294 994 22 924 99 13,142 272,278 12,376 27,476 13,137 272,266 5,742,599 1127.15 1046.90 1072.85 1438.25 1304.25 1342.55
Aug-01 786 293 994 21 931 112 15,937 294,172 14,008 26,350 15,931 294,150 5,752,425 1084.00 1051.75 1053.75 1370.25 1275.20 1277.35

SEBI BULLETIN
Sep-01 788 293 987 20 917 135 17,342 353,230 17,660 26,095 17,342 353,227 5,091,050 1059.90 849.95 913.85 1292.00 1038.75 1084.40

■
Oct-01 789 292 986 21 917 141 19,799 353,260 16,820 25,088 19,796 353,240 5,358,460 1000.95 884.65 971.90 1206.65 1044.90 1174.20
Nov-01 788 268 956 20 920 153 25,349 421,320 21,070 27,572 25,295 421,210 5,813,860 1097.60 973.55 1067.15 1376.75 1173.35 1334.15

VOL. 1
Dec-01 788 268 956 19 895 177 31,777 544,680 28,670 30,834 31,775 544,646 5,529,080 1132.65 1010.45 1059.05 1415.85 1215.45 1298.30

■
Jan-02 794 199 893 23 896 213 34,384 687,190 29,880 32,244 34,219 686,063 5,636,830 1121.75 1052.05 1075.40 1358.55 1273.80 1348.55
Feb-02 791 198 889 20 840 177 28,552 495,640 24,782 27,944 28,547 495,640 6,215,230 1205.95 1069.40 1142.05 1617.05 1350.60 1495.55

PART 3
Mar-02 793 197 890 19 840 157 23,294 442,625 23,296 28,111 23,291 442,624 6,368,610 1201.10 1117.85 1129.55 1611.20 1489.25 1566.95

■
2001-02 793 197 890 247 1,019 1,753 278,408 5,131,674 20,776 29,270 277,717 5,128,660 6,368,610 1207.00 849.95 1129.55 1676.25 1038.75 1566.95

Apr-02 800 173 865 22 843 201 28,798 533,200 24,240 26,512 28,782 533,159 6,495,510 1153.30 1073.30 1084.50 1658.50 1564.15 1607.75
May-02 798 172 863 22 821 217 35,303 549,791 24,990 25,384 35,303 549,791 6,316,092 1136.55 1020.10 1028.80 1665.15 1448.35 1497.10
Jun-02 799 170 848 20 825 189 38,519 442,411 22,120 23,378 38,519 442,411 6,599,910 1102.05 1029.25 1057.80 1682.00 1497.90 1617.40
Jul-02 799 163 841 23 820 211 36,821 513,984 22,350 24,311 36,821 513,984 6,086,430 1087.40 943.60 958.90 1690.35 1429.05 1455.85

MARCH 2003
■
Aug-02 799 161 839 21 806 191 26,000 461,131 21,960 24,090 26,000 461,131 6,326,180 1012.75 935.55 1010.60 1517.35 1433.05 1452.60

76
Sep-02 801 161 840 20 806 185 25,581 464,986 23,249 25,177 25,581 464,986 5,996,032 1024.65 960.20 963.15 1468.85 1255.20 1257.85

Oct-02 803 119 803 21 770 201 26,458 519,022 24,715 25,806 26,458 519,022 6,067,880 983.60 920.10 951.40 1321.00 1231.95 1255.30
Nov-02 805 118 788 19 767 175 23,631 513,515 27,030 29,354 23,631 513,515 6,453,880 1057.40 946.40 1050.15 1340.85 1243.15 1337.10
Dec-02 809 116 788 21 762 219 33,022 619,733 29,510 28,236 33,022 619,733 6,728,620 1103.95 1034.10 1093.50 1435.20 1337.20 1413.05
Jan-03 814 112 789 23 763 239 36,336 647,622 28,158 2,705 36,336 647,622 5,722,766 1105.60 1026.20 1041.85 1462.90 1353.75 1376.85
Feb-03 818 107 788 19 760 191 28,681 482,892 25,420 25,273 28,681 482,892 5,819,846 1075.50 1034.10 1063.40 1415.65 1333.75 1387.10
Mar-03 818 107 788 20 762 177 24,917 431,599 21,580 24,378 24,917 431,599 5,371,330 1070.85 974.10 978.20 1409.30 1255.35 1259.55

2002-03 818 107 788 251 899 2,398 364,065 6,179,887 24,621 25,776 364,049 6,179,836 5,371,330 1153.30 920.10 978.20 1690.35 1231.95 1259.55

*At the end of the period.

@ Excludes suspended companies.
# S&P CNX Nifty Index commenced from November 3, 1995.
## CNX Nifty Junior commenced from November 4, 1996.
SECURITIES AND EXCHANGE BOARD OF INDIA

Source : NSE
 Table 10 : Trends in Cash Segment of BSE, March 2003

Month/Year No. of No. of No. of No. of No. of Traded Turnover Average Demat Demat Market BSE Sensex # BSE-100 Index ##
Companies Companies Scrips Scrips Trades Quantity (Rs. mn.) Trade Securities Turnover Capitalisation High Low Close High Low Close
Listed* Permitted* Listed* Traded (Lakh) (Lakh) Size (Rs.) Traded (Rs. mn.) (Rs. mn.)*
(Lakh)

3-Mar-2003 5,647 12 7,355 1,600 4.64 648 12,009 25,878 646 11,984 6,202,123 3311.57 3274.64 3277.27 1642.98 1622.48 1623.63

4-Mar-2003 5,647 12 7,355 1,628 3.97 529 8,969 22,564 525 8,962 6,133,515 3272.19 3240.16 3244.80 1620.51 1604.32 1606.16
STATISTICAL TABLES

5-Mar-2003 5,647 12 7,355 1,600 4.73 660 11,172 23,608 654 11,142 6,100,378 3235.85 3190.06 3226.10 1601.65 1580.67 1598.59

6-Mar-2003 5,647 12 7,355 1,630 4.62 640 10,986 23,773 639 10,979 6,037,094 3252.28 3186.43 3190.35 1607.41 1579.68 1581.92

7-Mar-2003 5,647 12 7,355 1,605 4.47 597 10,022 22,420 593 9,987 5,950,050 3182.16 3142.89 3153.06 1577.26 1556.65 1561.84

10-Mar-2003 5,646 12 7,355 1,529 4.23 563 9,632 22,796 560 9,603 5,891,539 3162.27 3115.32 3125.88 1565.62 1542.75 1546.71

11-Mar-2003 5,646 12 7,355 1,577 5.01 717 11,052 22,079 712 11,046 5,922,012 3159.48 3100.14 3154.91 1558.45 1531.61 1555.85

12-Mar-2003 5,647 12 7,356 1,599 4.96 718 10,838 21,830 712 10,778 5,873,139 3158.98 3106.85 3110.08 1561.17 1535.36 1536.69

13-Mar-2003 5,647 12 7,356 1,633 4.74 702 11,483 24,221 690 11,264 5,867,639 3127.30 3086.43 3108.24 1545.52 1525.78 1536.06

17-Mar-2003 5,647 12 7,356 1,569 4.06 614 9,805 24,135 611 9,777 5,827,736 3115.14 3049.05 3084.91 1538.58 1509.54 1526.16

19-Mar-2003 5,647 12 7,357 1,570 3.94 629 9,660 24,495 626 9,644 5,862,597 3128.83 3103.87 3121.18 1546.73 1533.66 1540.62

SEBI BULLETIN
■
20-Mar-2003 5,647 12 7,357 1,570 5.15 850 13,463 26,151 846 13,416 5,951,292 3197.66 3118.32 3192.93 1575.28 1538.03 1572.37

21-Mar-2003 5,648 12 7,358 1,636 4.67 677 11,958 25,580 674 11,933 5,974,944 3209.46 3179.79 3200.15 1582.74 1570.82 1578.10

VOL. 1
22-Mar-2003 5,648 12 7,358 1,346 2.19 332 5,450 24,830 331 5,426 6,008,366 3225.26 3208.58 3218.73 1591.11 1583.31 1588.48

■
24-Mar-2003 5,649 12 7,361 1,614 3.58 543 9,046 25,286 539 8,985 5,896,948 3216.07 3137.56 3140.36 1588.21 1552.68 1553.67

25-Mar-2003 5,650 12 7,362 1,597 4.32 635 10,744 24,859 625 10,553 5,892,174 3143.02 3102.65 3140.42 1554.62 1534.98 1553.09

PART 3
■
26-Mar-2003 5,650 12 7,362 1,685 4.35 795 11,117 25,528 777 10,863 5,884,632 3165.38 3139.65 3143.58 1565.06 1552.05 1553.63

27-Mar-2003 5,650 12 7,362 1,472 3.54 556 8,133 22,952 538 8,013 5,855,961 3146.29 3115.06 3116.79 1556.29 1539.72 1540.44

28-Mar-2003 5,650 12 7,362 1,496 4.10 637 8,677 21,172 611 8,370 5,848,316 3130.33 3099.00 3115.44 1545.12 1531.14 1536.02

31-Mar-2003 5,650 12 7,363 1,431 3.76 623 8,431 22,398 605 8,266 5,721,974 3106.93 3039.83 3048.72 1529.72 1496.59 1500.72

MARCH 2003
Mar-03 5,650 12 7,363 2,191 85.06 12665 202,647 23,824 12,514 200,993 5,721,974 3311.57 3039.83 3,048.72 1642.98 1496.59 1500.72

77■
*At the end of the period.
# BSE Sensex commenced from January 2, 1986.
## BSE-100 Index commenced from April 3, 1984.
Source : BSE
73
 Table 11 : Trends in Cash Segment of NSE, March 2003

Month/Year No. of
Companies
No. of
Companies
No. of No. of No. of
Companies Companies Trades
Traded Turnover
Quantity (Rs. mn.)
Average Demat
Trade Size Securities
Demat Market
Turnover Capitalisation
S&P CNX Nifty Index #
High Low Close
CNX Nifty Junior Index ##
High Low Close
74
Listed* Permitted* Available for Traded (Lakh) (Lakh) (Rs.) Traded (Rs. mn.) (Rs. mn.)*
Trading* @ (Lakh)

03-Mar-2003 NA NA NA 716 10 1,325 24,745 25,620 1,325 24,745 5,820,581 1070.85 1057.55 1058.85 1409.30 1387.60 1389.25

04-Mar-2003 NA NA NA 718 8 1,073 18,910 23,200 1,073 18,910 5,754,065 1058.70 1045.20 1046.60 1391.55 1369.80 1378.50

05-Mar-2003 NA NA NA 722 10 1,295 23,734 24,528 1,295 23,734 5,719,020 1046.55 1029.90 1040.70 1377.05 1352.35 1370.85

06-Mar-2003 NA NA NA 707 10 1,298 22,493 23,513 1,298 22,493 5,670,212 1040.75 1029.55 1031.25 1373.35 1359.75 1361.95

07-Mar-2003 NA NA NA 715 9 1,173 20,727 22,290 1,173 20,727 5,580,885 1031.05 1014.30 1017.10 1356.20 1330.50 1336.75

10-Mar-2003 NA NA NA 703 9 1,127 20,359 22,929 1,127 20,359 5,520,123 1021.50 1004.35 1006.70 1339.45 1304.80 1308.60

11-Mar-2003 NA NA NA 712 10 1,494 23,527 23,038 1,494 23,527 5,553,590 1016.70 998.95 1014.55 1320.60 1291.15 1317.75

12-Mar-2003 NA NA NA 712 10 1,452 22,827 23,150 1,452 22,827 5,511,496 1017.75 1000.05 1001.70 1333.70 1309.55 1310.80

13-Mar-2003 NA NA NA 718 10 1,392 22,617 22,967 1,392 22,617 5,498,007 1006.40 994.20 999.65 1317.95 1297.95 1306.00

17-Mar-2003 NA NA NA 716 8 1,117 18,702 22,846 1,117 18,702 5,462,636 1000.85 982.70 993.00 1299.65 1286.00 1297.45

19-Mar-2003 NA NA NA 707 8 1,240 21,114 26,071 1,240 21,114 5,499,293 1011.45 992.90 1003.90 1316.35 1297.65 1300.90

SEBI BULLETIN
20-Mar-2003 NA NA NA 705 11 1,703 29,252 27,212 1,703 29,252 5,582,098 1028.90 1001.75 1025.25 1322.85 1294.20 1319.55

■
21-Mar-2003 NA NA NA 706 10 1,341 26,726 26,791 1,341 26,726 5,616,076 1033.70 1022.05 1030.55 1335.85 1321.25 1330.00

22-Mar-2003 NA NA NA 663 4 549 10,563 26,212 549 10,563 5,644,506 1039.80 1030.60 1037.15 1348.40 1339.75 1345.65

VOL. 1
24-Mar-2003 NA NA NA 697 8 1,009 20,207 26,821 1,009 20,207 5,541,847 1038.55 1011.95 1013.90 1347.70 1313.45 1315.95

■
25-Mar-2003 NA NA NA 704 9 1,212 23,602 25,515 1,212 23,602 5,530,075 1013.50 998.40 1011.30 1315.60 1292.60 1313.45

26-Mar-2003 NA NA NA 708 9 1,289 21,905 24,810 1,289 21,905 5,533,371 1019.90 1004.85 1013.85 1332.40 1307.85 1312.05

PART 3
■
27-Mar-2003 NA NA NA 684 8 1,211 20,342 25,754 1,211 20,342 5,491,313 1013.90 999.60 1002.70 1315.90 1306.05 1308.55

28-Mar-2003 NA NA NA 698 9 1,423 20,521 22,735 1,423 20,521 5,484,226 1006.30 996.75 1000.60 1314.40 1295.65 1299.15

31-Mar-2003 NA NA NA 705 8 1,195 18,726 22,513 1,195 18,726 5,371,332 1000.60 974.10 978.20 1295.75 1255.35 1259.55

Mar-03 NA NA NA 762 177 24,917 431,599 24,378 24,917 431,599 5,371,330 1070.85 974.10 978.20 1409.30 1255.35 1259.55

MARCH 2003
■
*At the end of the period.

78
@ Excludes suspended companies.
# S&P CNX Nifty Index commenced from November 3, 1995.
## CNX Nifty Junior commenced from November 4, 1996.
Source : NSE
SECURITIES AND EXCHANGE BOARD OF INDIA
 Table 12 : Tunover and Market Capitalisation at BSE and NSE, March 2003
(Amount in Rs. mn.)
Date Turnover Market Capitalisation

BSE NSE BSE NSE

Sensex BSE-100 Total A# B# S&P CNX Total C# D# Sensex BSE-100 Total E# F# S&P CNX Total G# H#
CNX Nifty CNX Nifty
Nifty Junior Nifty Junior

3-Mar-2003 4849.90 7822.20 12008.80 40.39 65.14 15,342 1,501 24,745 62.00 6.07 2,688,516 4,214,765 6,202,123 43.35 67.96 3,417,591 351,015 5,820,581 58.72 6.03
STATISTICAL TABLES

4-Mar-2003 3665.20 6196.70 8968.80 40.87 69.09 11,631 1,817 18,910 61.51 9.61 2,672,841 4,177,811 6,133,515 43.58 68.11 3,378,131 348,289 5,754,065 58.71 6.05

5-Mar-2003 5044.60 7950.60 11171.80 45.15 71.17 15,447 2,006 23,734 65.09 8.45 2,657,438 4,159,948 6,100,378 43.56 68.19 3,370,058 332,216 5,719,020 58.93 5.81

6-Mar-2003 4319.90 7473.80 10986.20 39.32 68.03 12,712 2,672 22,493 56.51 11.88 2,627,987 4,116,576 6,037,094 43.53 68.19 3,339,547 334,119 5,670,212 58.90 5.89

7-Mar-2003 4350.50 7148.10 10022.00 43.41 71.32 13,269 1,628 20,727 64.02 7.85 2,597,271 4,064,318 5,950,050 43.65 68.31 3,293,602 325,625 5,580,885 59.02 5.83

10-Mar-2003 4151.20 6902.60 9632.20 43.10 71.66 13,282 2,000 20,359 65.24 9.83 2,574,960 4,025,014 5,891,539 43.71 68.32 3,259,944 321,031 5,520,123 59.06 5.82

11-Mar-2003 4577.10 7858.20 11052.40 41.41 71.10 14,533 2,301 23,527 61.77 9.78 2,598,876 4,048,798 5,922,012 43.89 68.37 3,285,403 323,287 5,553,590 59.16 5.82

12-Mar-2003 4416.40 7239.70 10837.90 40.75 66.80 13,746 2,065 22,827 60.22 9.05 2,561,949 3,998,958 5,873,139 43.62 68.09 3,243,776 321,574 5,511,496 58.85 5.83

13-Mar-2003 4844.80 7982.50 11482.60 42.19 69.52 14,219 2,063 22,617 62.87 9.12 2,560,431 3,997,320 5,867,639 43.64 68.12 3,237,162 318,242 5,498,007 58.88 5.79

17-Mar-2003 4875.20 7147.40 9804.90 49.72 72.90 12,837 1,251 18,702 68.64 6.69 2,541,213 3,971,574 5,827,736 43.61 68.15 3,215,654 318,310 5,462,636 58.87 5.83

SEBI BULLETIN
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19-Mar-2003 4973.40 7215.70 9660.40 51.48 74.69 15,113 1,370 21,114 71.58 6.49 2,571,087 4,009,198 5,862,597 43.86 68.39 3,250,955 357,050 5,499,293 59.12 6.49

20-Mar-2003 6468.70 9449.20 13463.50 48.05 70.18 19,334 2,190 29,252 66.09 7.49 2,630,192 4,091,836 5,951,292 44.20 68.76 3,320,242 362,166 5,582,098 59.48 6.49

VOL. 1
21-Mar-2003 4708.40 7945.70 11957.90 39.37 66.45 17,225 1,728 26,726 64.45 6.46 2,636,143 4,106,753 5,974,944 44.12 68.73 3,337,439 365,044 5,616,076 59.43 6.50

■
22-Mar-2003 2027.60 3524.90 5450.20 37.20 64.67 6,330 750 10,563 59.92 7.10 2,651,447 4,133,758 6,008,366 44.13 68.80 3,358,789 369,328 5,644,506 59.51 6.54

24-Mar-2003 4332.10 6272.10 9045.90 47.89 69.34 13,891 1,046 20,207 68.74 5.18 2,586,890 4,043,171 5,896,948 43.87 68.56 3,283,478 361,281 5,541,847 59.25 6.52

PART 3
■
25-Mar-2003 4376.20 7157.60 10743.50 40.73 66.62 15,040 1,875 23,602 63.72 7.94 2,586,936 4,041,668 5,892,174 43.90 68.59 3,275,053 360,590 5,530,075 59.22 6.52

26-Mar-2003 3689.70 6795.60 11117.00 33.19 61.13 12,572 2,332 21,905 57.39 10.64 2,589,543 4,043,069 5,884,632 44.01 68.71 3,283,241 360,214 5,533,371 59.34 6.51

27-Mar-2003 3670.20 5691.50 8132.70 45.13 69.98 13,682 1,878 20,342 67.26 9.23 2,567,472 4,008,748 5,855,961 43.84 68.46 3,247,157 359,248 5,491,313 59.13 6.54

28-Mar-2003 3380.80 5473.20 8677.50 38.96 63.07 11,578 1,908 20,521 56.42 9.30 2,566,365 3,997,229 5,848,316 43.88 68.35 3,240,400 356,675 5,484,226 59.09 6.50

MARCH 2003
31-Mar-2003 3949.80 5849.20 8431.20 46.85 69.38 12,074 1,461 18,726 64.48 7.80 2,511,409 3,905,339 5,721,974 43.89 68.25 3,167,623 345,495 5,371,332 58.97 6.43

79■
A# = % age share of Sensex securities in total BSE turnover E# = % age share of Sensex securities in total BSE Market Capitalisation.
B# = % age share of BSE-100 Index securities in total BSE turnover. F# = % age share of BSE-100 Index securities in total BSE Market Capitalisation
C# = % age share of S&P CNX Nifty securities in total NSE turnover. G# = % age share of S&P CNX Nifty securities in total NSE Market Capitalisation.
D# = % age share of CNX Nifty Junior securities in total NSE turnover. H# = % age share of CNX Nifty Junior securities in total NSE Market Capitalisation.
Source : BSE and NSE
75
 Table 13 : Movement of Indices in BSE, March 2003

Date BSE Sensex BSE 100 Dollex 200* 76

Open High Low Close Open High Low Close Close
3-Mar-2003 3301.67 3311.57 3274.64 3277.27 1637.11 1642.98 1622.48 1623.63 136.00
4-Mar-2003 3271.06 3272.19 3240.16 3244.80 1620.51 1620.51 1604.32 1606.16 134.55
5-Mar-2003 3233.43 3235.85 3190.06 3226.10 1601.65 1601.65 1580.67 1598.59 133.91
6-Mar-2003 3252.28 3252.28 3186.43 3190.35 1607.41 1607.41 1579.68 1581.92 132.41
7-Mar-2003 3182.16 3182.16 3142.89 3153.06 1577.26 1577.26 1556.65 1561.84 130.53
10-Mar-2003 3152.90 3162.27 3115.32 3125.88 1561.42 1565.62 1542.75 1546.71 129.41
11-Mar-2003 3117.49 3159.48 3100.14 3154.91 1542.40 1558.45 1531.61 1555.85 130.18
12-Mar-2003 3151.60 3158.98 3106.85 3110.08 1555.03 1561.17 1535.36 1536.69 128.79
13-Mar-2003 3113.35 3127.30 3086.43 3108.24 1538.82 1545.52 1525.78 1536.06 128.68
17-Mar-2003 3115.14 3115.14 3049.05 3084.91 1538.58 1538.58 1509.54 1526.16 127.81
19-Mar-2003 3103.87 3128.83 3103.87 3121.18 1533.66 1546.73 1533.66 1540.62 128.61

SEBI BULLETIN
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20-Mar-2003 3118.80 3197.66 3118.32 3192.93 1538.33 1575.28 1538.03 1572.37 130.38
21-Mar-2003 3195.66 3209.46 3179.79 3200.15 1575.07 1582.74 1570.82 1578.10 131.15

VOL. 1
■
22-Mar-2003 3208.58 3225.26 3208.58 3218.73 1583.31 1591.11 1583.31 1588.48 131.84
24-Mar-2003 3216.07 3216.07 3137.56 3140.36 1588.21 1588.21 1552.68 1553.67 129.44

PART 3
25-Mar-2003 3122.70 3143.02 3102.65 3140.42 1547.65 1554.62 1534.98 1553.09 129.36

■
26-Mar-2003 3148.07 3165.38 3139.65 3143.58 1555.58 1565.06 1552.05 1553.63 129.49
27-Mar-2003 3138.89 3146.29 3115.06 3116.79 1551.26 1556.29 1539.72 1540.44 128.76
28-Mar-2003 3115.37 3130.33 3099.00 3115.44 1539.73 1545.12 1531.14 1536.02 128.43

MARCH 2003
31-Mar-2003 3106.93 3106.93 3039.83 3048.72 1529.72 1529.72 1496.59 1500.72 125.87

80■
*Dollex 200 is calculated at the end of trading session, hence open, high, low are not available.
Source : BSE
SECURITIES AND EXCHANGE BOARD OF INDIA
 Table 14 : Movement of Indices in NSE, March 2003

Date S&P CNX Nifty CNX Nifty Junior S&P CNX Defty
Open High Low Close Open High Low Close Open High Low Close
3-Mar-03 1063.55 1070.85 1057.55 1058.85 1401.00 1409.30 1387.60 1389.25 772.90 778.20 768.55 769.50
4-Mar-03 1058.70 1058.70 1045.20 1046.60 1389.45 1391.55 1369.80 1378.50 769.70 769.70 759.90 760.90
5-Mar-03 1046.55 1046.55 1029.90 1040.70 1377.05 1377.05 1352.35 1370.85 761.05 761.05 748.90 756.75
STATISTICAL TABLES

6-Mar-03 1040.30 1040.75 1029.55 1031.25 1373.35 1373.35 1359.75 1361.95 756.65 757.00 748.80 750.05
7-Mar-03 1031.05 1031.05 1014.30 1017.10 1356.20 1356.20 1330.50 1336.75 750.05 750.05 737.90 739.90
10-Mar-03 1017.10 1021.50 1004.35 1006.70 1332.30 1339.45 1304.80 1308.60 739.60 742.80 730.35 732.05
11-Mar-03 1006.65 1016.70 998.95 1014.55 1301.30 1320.60 1291.15 1317.75 732.15 739.45 726.55 737.90
12-Mar-03 1014.25 1017.75 1000.05 1001.70 1319.45 1333.70 1309.55 1310.80 737.55 740.10 727.20 728.40
13-Mar-03 1001.50 1006.40 994.20 999.65 1314.35 1317.95 1297.95 1306.00 728.25 731.80 722.95 726.90
17-Mar-03 999.70 1000.85 982.70 993.00 1299.65 1299.65 1286.00 1297.45 726.80 727.65 714.45 721.95
19-Mar-03 993.35 1011.45 992.90 1003.90 1306.00 1316.35 1297.65 1300.90 722.05 735.20 721.70 729.70

SEBI BULLETIN
■
20-Mar-03 1003.45 1028.90 1001.75 1025.25 1300.80 1322.85 1294.20 1319.55 729.05 747.55 727.85 744.90
21-Mar-03 1025.55 1033.70 1022.05 1030.55 1321.25 1335.85 1321.25 1330.00 744.20 750.10 741.65 747.85

VOL. 1
■
22-Mar-03 1030.60 1039.80 1030.60 1037.15 1339.75 1348.40 1339.75 1345.65 748.95 755.65 748.95 753.75
24-Mar-03 1037.15 1038.55 1011.95 1013.90 1347.70 1347.70 1313.45 1315.95 753.70 754.75 735.40 736.85

PART 3
25-Mar-03 1013.50 1013.50 998.40 1011.30 1302.25 1315.60 1292.60 1313.45 736.85 736.85 725.85 735.25

■
26-Mar-03 1011.55 1019.90 1004.85 1013.85 1314.45 1332.40 1307.85 1312.05 736.20 742.30 731.30 737.85
27-Mar-03 1013.90 1013.90 999.60 1002.70 1311.50 1315.90 1306.05 1308.55 738.70 738.70 728.25 730.50
28-Mar-03 1002.80 1006.30 996.75 1000.60 1306.85 1314.40 1295.65 1299.15 730.90 733.45 726.50 729.30

MARCH 2003
31-Mar-03 1000.60 1000.60 974.10 978.20 1295.75 1295.75 1255.35 1259.55 729.15 729.15 709.80 712.80

81■
Source : NSE
77
 78 SECURITIES AND EXCHANGE BOARD OF INDIA

Table 15 : BSE Sensex, March 2003

Sl. No. Name of Issued Market Weightage Beta R2 Average Monthly Impact
Security Capital Capitalisation (%) Daily Return Cost (%)
(Rs. mn.) (Rs. mn.) Volatility (%)
(%)

1 A.C.C. 1,709 23,672 0.94 0.54 0.36 1.86 (10.09) 0.19

2 BAJAJ AUTO 1,012 48,533 1.93 0.70 0.66 1.59 (7.11) 0.42

3 BHEL 2,448 54,679 2.18 0.87 0.02 1.82 6.36 0.22

4 BSES LTD. 1,378 29,675 1.18 0.09 0.54 1.72 (5.96) 1.63

5 CASTROL 1,236 23,455 0.93 0.05 0.02 1.14 (1.63) 0.83

6 CIPLA 600 42,847 1.71 0.37 0.60 1.32 (7.12) 0.38

7 COLGATE PA 1,360 16,523 0.66 (0.07) 0.19 0.73 (8.16) 1.57

8 DR.REDDY’S 382 70,114 2.79 0.21 0.00 0.92 4.54 0.21

9 GLAXO LTD 745 21,743 0.87 0.25 0.51 1.19 (5.72) 0.95

10 GRASIM IND 917 30,315 1.21 0.11 0.68 1.00 (5.41) 0.98

11 GUJ. AMB. CE 1,552 24,791 0.99 0.41 0.19 1.26 (0.87) 0.67

12 HCL TECHNO 577 43,707 1.74 2.03 0.66 2.94 (13.55) 0.31

13 HDFC LTD. 2,441 80,974 3.22 0.11 0.44 1.67 (11.55) 0.57

14 HERO HONDA 399 37,621 1.50 1.57 0.36 3.48 (15.59) 0.24

15 HINDALCO 925 49,428 1.97 1.10 0.74 1.61 (12.53) 1.35

16 HIND. LEVER 2,201 325,674 12.97 0.79 0.62 1.72 (6.14) 0.11

17 HIND. PETRO 3,393 99,882 3.98 0.18 0.46 1.04 (8.99) 0.09

18 ICICI BANK 6,130 82,116 3.27 0.75 0.63 1.46 (10.34) 0.33

19 INFO. TECH 331 267,587 10.65 1.59 0.17 2.27 (5.69) 0.03

20 ITC LTD. 2,475 155,809 6.20 0.24 0.06 0.94 (3.07) 0.18

21 LARSEN & T 2,486 45,910 1.83 0.57 0.77 1.03 (7.77) 0.17

22 MAHA.TELE 6,300 60,512 2.41 0.18 0.02 1.45 (4.57) 0.51

23 NESTLE (I) 964 51,558 2.05 (0.14) 0.07 0.94 (0.05) 1.33

24 RANBAXY LB 1,855 115,804 4.61 0.65 0.10 1.99 1.71 0.14

25 RELIANCE 13,964 386,029 15.37 1.52 0.76 1.98 (5.95) 0.04

26 SATYAM COM 629 55,658 2.22 2.16 0.89 2.87 (21.53) 0.04

27 STATE BNK 5,263 142,048 5.66 0.92 0.90 1.29 (5.55) 0.07

28 TATA ENGG 3,198 49,774 1.98 0.99 0.35 1.62 (4.48) 0.20

29 TATA STEEL 3,678 49,190 1.96 1.19 0.90 1.90 (10.89) 0.08

30 ZEE TELE. 413 25,782 1.03 1.50 0.77 2.21 (25.60) 0.20

Total 70,960 2,511,410 100.00 1.00 - - (7.15) NA

*Beta & R2 are calculated for the period February 1, 2002 to February 28, 2003. Beta measures the degree to which any portfolio of stocks
is affected as compared to the effect on the market as a whole. The coefficient of determination (R 2) measures the strength of relationship
between two variables the return on a security versus that of the market.
*Volatility is the standard deviation of the daily returns for the period February 1, 2003 to February 28, 2003.
*Impact cost is calculated as the difference between actual buy price and ideal buy price, divided by ideal buy price, multiplied by 100. Hence
ideal price is calculated as (best buy + best sell)/2. It is calculated for a month for the portfolio size of Rs. 2 lakh.
Source : BSE

SEBI BULLETIN ■ VOL. 1 ■ PART 3 ■ MARCH 2003 ■ 82

 STATISTICAL TABLES 79
Table 16 : S&P CNX Nifty, March 2003
Sl. No. Name of Issued Market Weightage Beta R2 Average Daily Monthly Impact
Security Capital Capitalisation (%) Volatility Return Cost (%)
(Rs. mn.) (Rs. mn.) (%) (%)
1 ABB 424 12,132 0.38 0.39 0.04 1.73 (9.81) 0.19
2 ACC 1,709 23,673 0.75 0.88 0.26 1.84 (10.15) 0.07
3 BAJAJ AUTO 1,012 48,568 1.53 0.75 0.17 1.54 (6.93) 0.11
4 BHEL 2,448 54,618 1.72 0.69 0.14 1.93 5.63 0.09
5 BPCL 3,000 66,585 2.10 1.05 0.13 2.01 (0.83) 0.07
6 BRITANNIA 259 12,880 0.41 0.07 0.01 0.70 (4.24) 0.21
7 BSES 1,377 29,672 0.94 0.34 0.05 1.79 (6.00) 0.21
8 CASTROL 1,235 23,441 0.74 0.30 0.07 1.06 (2.01) 0.17
9 CIPLA 600 42,808 1.35 0.34 0.06 1.30 (7.35) 0.10
10 COLGATE 1,360 16,557 0.52 0.07 0.00 0.76 (8.11) 0.14
11 DABUR 286 10,187 0.32 0.52 0.12 1.58 (18.70) 0.20
12 DIGITALEQP 330 19,863 0.63 1.75 0.41 2.10 (7.47) 0.04
13 DR REDDY 383 70,112 2.21 0.74 0.16 0.93 4.56 0.07
14 GLAXO 745 21,762 0.69 0.19 0.01 1.10 (5.89) 0.17
15 GRASIM 917 30,288 0.96 0.47 0.11 1.02 (5.87) 0.12
16 GUJ AMB CEM 1,552 24,830 0.78 0.57 0.17 1.21 (1.05) 0.13
17 HCLTECH 577 43,563 1.38 1.78 0.32 2.89 (13.98) 0.11
18 HDFC 2,442 80,930 2.55 0.23 0.02 1.48 (11.59) 0.11
19 HDFC BANK 2,820 66,154 2.09 0.24 0.03 1.77 (6.12) 0.16
20 HERO HONDA 399 37,581 1.19 0.82 0.12 3.17 (15.61) 0.08
21 HINDALCO 925 49,437 1.56 0.27 0.05 1.02 (8.97) 0.12
22 HIND LEVER 2,201 326,555 10.31 0.98 0.37 1.56 (12.40) 0.12
23 HIND PETRO 3,393 100,034 3.16 1.30 0.14 1.69 (6.11) 0.06
24 ICICI BANK 6,130 81,993 2.59 0.73 0.10 1.38 (10.42) 0.10
25 IND HOTEL 451 8,227 0.26 0.49 0.09 2.04 (11.44) 0.17
26 INFOSYS TCH 331 268,320 8.47 1.52 0.49 2.21 (5.43) 0.04
27 IPCL 2,482 20,801 0.66 0.57 0.03 1.54 (7.61) 0.13
28 ITC 2,475 155,499 4.91 0.64 0.16 0.94 (3.46) 0.07
29 L&T 2,487 45,890 1.45 0.63 0.21 1.02 (7.98) 0.07
30 M&M 1,105 10,971 0.35 1.30 0.34 1.41 (9.85) 0.11
31 MTNL 6,300 60,449 1.91 0.76 0.08 1.40 (4.81) 0.14
32 NESTLE 964 51,708 1.63 0.12 0.01 0.88 0.22 0.22
33 NIIT 386 3,728 0.12 2.34 0.36 3.08 (29.00) 0.07
34 NOVART IND 159 6,959 0.22 0.50 0.09 0.90 (8.04) 0.25
35 ORIENT BANK 1,925 12,342 0.39 0.61 0.08 2.89 10.52 0.16
36 RANBAXY 1,855 115,656 3.65 0.58 0.12 1.88 1.39 0.08
37 RELIANCE 13,964 388,333 12.26 1.30 0.48 1.82 (5.65) 0.06
38 SATYAM COMP 629 55,768 1.76 2.09 0.62 2.71 (21.58) 0.05
39 SBIN 5,263 142,101 4.49 0.78 0.27 1.21 (5.79) 0.06
40 SCI 2,823 14,285 0.45 1.37 0.15 2.57 (15.67) 0.10
41 SMITKLBECH 454 9,841 0.31 0.19 0.02 1.69 (8.41) 0.33
42 SUN PHARMA 468 25,400 0.80 0.26 0.03 1.94 (3.43) 0.29
43 TATA CHEM 1,806 11,055 0.35 1.11 0.19 1.57 (4.90) 0.14
44 TATA POWER 2,035 23,030 0.73 0.92 0.35 1.42 (7.44) 0.11
45 TATA TEA 562 10,634 0.34 0.88 0.25 1.53 6.47 0.10
46 TELCO 3,198 49,784 1.57 1.35 0.38 1.61 (4.60) 0.07
47 TISCO 3,681 49,220 1.55 1.18 0.37 1.80 (11.10) 0.06
48 VSNL 2,850 20,848 0.66 0.67 0.09 1.64 (18.45) 0.14
49 WIPRO 465 286,854 9.06 1.73 0.40 1.90 (16.06) 0.09
50 ZEE TELE 413 25,699 0.81 1.77 0.36 2.22 (26.05) 0.09
Total 96,057 3,167,623 100 1.00 — 1.09 (8.01) 0.09

*Beta & R2 are calculated for the period February 1, 2002 to February 28, 2003. Beta measures the degree to which any portfolio of stocks
is affected as compared to the effect on the market as a whole. The coefficient of determination (R 2) measures the strength of relationship
between two variables the return on a security versus that of the market.
*Volatility is the standard deviation of the daily returns for the period February 1, 2003 to February 28, 2003.
*Impact cost is calculated as the difference between actual buy price and ideal buy price, divided by ideal buy price, multiplied by 100. Hence
ideal price is calculated as (best buy + best sell)/2. It has been calculated for the month based on a portfolio value of 50 lakh invested in
proportion to their weights in index.
Source : NSE

SEBI BULLETIN ■ VOL. 1 ■ PART 3 ■ MARCH 2003 ■ 83

 80 SECURITIES AND EXCHANGE BOARD OF INDIA

Table 17 : Movement in DSE and MSE Share Price Index, March 2003

Trading Days DSE MSE

Open High Low Close Open High Low Close
3-Mar-03 826.94 826.94 826.94 826.94 3580.42 3580.42 3575.42 3575.42
4-Mar-03 826.94 826.94 826.94 826.94 3575.42 3575.42 3566.42 3566.42
5-Mar-03 826.94 826.94 826.94 826.94 3566.42 3566.42 3560.74 3560.74
6-Mar-03 826.94 826.94 826.94 826.94 3560.74 3560.74 3549.53 3549.53
7-Mar-03 826.94 826.94 826.94 826.94 3549.53 3549.53 3539.24 3539.24
10-Mar-03 826.94 827.30 826.94 827.30 3539.24 3539.24 3530.83 3530.83
11-Mar-03 827.30 827.30 827.30 827.30 3530.83 3541.49 3530.83 3541.49
12-Mar-03 827.30 827.30 827.30 827.30 3541.49 3541.49 3528.49 3528.49
13-Mar-03 827.30 832.43 823.83 832.43 3528.49 3528.49 3528.49 3528.49
17-Mar-03 832.43 832.43 832.43 832.43 3528.49 3528.49 3521.49 3521.49
19-Mar-03 832.43 832.43 832.43 832.43 3521.49 3533.49 3521.49 3533.49
20-Mar-03 832.43 832.43 832.43 832.43 3533.49 3552.18 3533.49 3552.18
21-Mar-03 832.43 832.43 832.43 832.43 3552.18 3557.79 3552.18 3557.79
24-Mar-03 832.43 832.43 832.43 832.43 3557.79 3557.79 3537.23 3537.23
25-Mar-03 832.43 832.43 832.43 832.43 3537.23 3537.23 3537.23 3537.23
26-Mar-03 832.43 832.43 831.44 831.44 3537.23 3540.55 3537.23 3540.55
27-Mar-03 831.44 831.44 803.43 803.43 3540.55 3540.55 3532.14 3532.14
28-Mar-03 803.43 803.43 803.43 803.43 3532.14 3532.14 3532.14 3532.14
31-Mar-03 803.43 803.43 803.43 803.43 3532.14 3532.14 3515.31 3515.31

Source : Delhi Stock Exchange and Madras Stock Exchange

SEBI BULLETIN ■ VOL. 1 ■ PART 3 ■ MARCH 2003 ■ 84

 Table 18 : Volatility* of Major Indices
(In percent)
Month/Year Sensex BSE-100 Index Dollex-200 S&P CNX Nifty CNX Nifty Junior S&P CNX Defty DSE Index MSE Index
Apr-01 2.41 2.77 2.74 2.17 2.39 2.25 1.56 1.42
May-01 0.94 1.07 1.04 0.87 1.18 0.87 0.72 0.61
Jun-01 1.28 1.44 1.37 1.24 1.28 1.25 1.09 0.70
STATISTICAL TABLES

Jul-01 1.18 1.10 1.08 0.99 1.15 1.02 0.89 0.64

Aug-01 0.71 0.69 0.67 0.55 0.57 0.56 0.75 0.31
Sep-01 2.73 2.82 2.95 2.49 2.67 2.55 2.24 1.42
Oct-01 1.44 1.37 1.33 1.17 0.96 1.20 1.16 0.73
Nov-01 1.29 1.27 1.19 1.20 0.96 1.20 1.00 0.57
Dec-01 1.33 1.52 1.52 1.18 1.76 1.19 0.75 0.89
Jan-02 0.92 1.00 0.99 0.97 0.88 0.95 0.76 0.71
Feb-02 1.51 1.69 1.87 1.21 1.65 1.21 0.95 1.25

SEBI BULLETIN
■
Mar-02 1.32 1.13 1.23 1.14 1.07 1.15 0.91 0.67
2001-02 1.50 1.60 1.62 1.40 1.58 1.42 1.56 0.91

VOL. 1
Apr-02 0.99 1.07 1.22 1.08 0.93 1.07 0.75 0.75

■
May-02 1.55 1.42 1.37 1.31 1.71 1.29 0.42 0.89
Jun-02 1.17 1.11 1.19 1.10 1.30 1.12 0.42 0.77

PART 3
■
Jul-02 1.07 1.09 1.15 0.99 1.44 1.00 0.32 0.60
Aug-02 0.91 0.85 0.76 0.83 1.01 0.82 0.12 0.51
Sep-02 0.82 0.71 0.69 0.71 1.34 0.72 0.30 0.37
Oct-02 0.97 0.85 0.90 0.82 1.00 0.80 0.01 0.51

MARCH 2003
■
Nov-02 0.68 0.58 0.55 0.67 0.59 0.66 0.07 0.44

85
Dec-02 0.84 1.06 0.98 0.94 1.10 0.92 0.59 0.42
Jan-03 0.71 0.73 0.73 0.78 1.03 0.77 0.70 0.37
Feb-03 0.79 0.81 0.84 0.89 1.21 0.93 0.24 0.33
Mar-03 1.12 1.04 0.89 1.09 1.15 1.09 0.80 0.28
2002-03 1.01 0.99 0.98 0.99 1.23 0.99 0.47 0.58

*Volatility is calculated as the standard deviation of the natural log of returns in indices for the respective period.
Source : BSE, NSE, DSE and MSE
81
 82 SECURITIES AND EXCHANGE BOARD OF INDIA

Table 19 : City-wise Distribution of Turnover on Cash Segments of BSE and NSE

(% share in turnover)
Sl. No. Stock Exchange City BSE NSE
2000-01 2001-02 2002-03 2000-01 2001-02 2002-03
1 Ahmedabad 0.74 0.97 2.34 2.68 2.49 2.28
2 Bangalore 0.15 0.30 0.44 1.69 2.79 2.52
3 Baroda 0.29 0.54 0.82 0.73 0.62 0.68
4 Bhubaneshwar NA NA 0.02 0.04 0.07 0.05
5 Chennai 0.19 0.16 0.26 3.40 3.56 3.59
6 Cochin 0.16 0.27 0.12 0.75 0.79 0.88
7 Coimbatore NA 0.04 0.04 0.59 0.60 0.55
8 Delhi 0.28 1.31 2.14 17.03 19.40 18.38
9 Gauhati NA NA 0.03 0.11 0.12 0.05
10 Hyderabad NA 0.13 0.13 2.30 2.85 3.2
11 Indore 0.11 0.18 0.63 1.13 1.08 0.85
12 Jaipur 0.19 0.23 0.71 1.06 1.16 1.33
13 Kanpur NA 0.26 0.41 0.55 0.95 0.75
14 Kolkata 0.72 0.84 1.36 8.25 9.15 12.03
15 Ludhiana NA 0.01 0.24 0.18 0.53 0.44
16 Mumbai 89.86 84.01 77.56 48.35 40.20 40.01
17 Patna NA NA 0.03 0.08 0.11 0.12
18 Pune 0.69 0.60 0.35 1.07 1.03 1.06
19 Mangalore NA NA 0.12 0.09 0.12 0.12
20 Rajkot 0.26 0.32 1.37 0.38 0.29 0.27
21 Others 6.36 9.83 10.88 9.56 12.51 10.84
Total 100.00 100.00 100.00 100.00 100.00 100.00

Source : BSE, NSE

SEBI BULLETIN ■ VOL. 1 ■ PART 3 ■ MARCH 2003 ■ 86

 STATISTICAL TABLES 83
Table 20 : Advances/Declines in cash segment of exchanges (No. of Securities)

Month/Date BSE NSE

Advances Declines Advance/ Advances Declines Advance/
Decline Decline
Ratio Ratio
Apr-01 433 1541 0.28 372 421 0.88
May-01 1076 783 1.37 426 401 1.06
June-01 748 1035 0.72 328 474 0.69
July -01 424 1307 0.32 395 525 0.75
Aug-01 547 1129 0.48 480 488 0.98
Sep-01 417 1199 0.35 432 541 0.80
Oct-01 756 815 0.93 527 446 1.18
Nov-01 1277 275 4.64 597 458 1.30
Dec-01 957 571 1.68 481 551 0.87
Jan-02 390 1097 0.36 342 372 0.92
Feb-02 815 630 1.29 361 361 1.00
Mar-02 673 767 0.88 342 374 0.91
Apr-02 1021 407 2.51 381 354 1.08
May-02 938 483 1.94 329 412 0.80
Jun-02 1055 358 2.95 412 352 1.17
Jul-02 1018 393 2.59 304 464 0.66
Aug-02 106 1300 0.08 355 376 0.94
Sep-02 284 1106 0.26 302 419 0.72
Oct-02 266 1110 0.24 301 369 0.82
Nov-02 717 645 1.11 374 297 1.26
Dec-02 1072 294 3.65 323 357 0.91
Jan-03 903 1363 0.66 389 420 0.93
Feb-03 612 1563 0.39 303 361 0.84
3-Mar-2003 637 772 0.83 269 392 0.69
4-Mar-2003 407 1059 0.38 132 551 0.24
5-Mar-2003 439 972 0.45 160 519 0.31
6-Mar-2003 486 943 0.52 218 442 0.49
7-Mar-2003 335 1119 0.30 99 584 0.17
10-Mar-2003 382 997 0.38 137 532 0.26
11-Mar-2003 671 716 0.94 332 329 1.01
12-Mar-2003 654 752 0.87 308 360 0.86
13-Mar-2003 604 835 0.72 249 412 0.60
17-Mar-2003 442 975 0.45 166 511 0.32
19-Mar-2003 656 706 0.93 352 309 1.14
20-Mar-2003 827 577 1.43 461 202 2.28
21-Mar-2003 799 634 1.26 412 246 1.67
22-Mar-2003 730 474 1.54 413 210 1.97
24-Mar-2003 388 1050 0.37 119 550 0.22
25-Mar-2003 525 884 0.59 223 433 0.52
26-Mar-2003 526 972 0.54 223 425 0.52
27-Mar-2003 645 639 1.01 269 347 0.78
28-Mar-2003 575 747 0.77 266 373 0.71
31-Mar-2003 332 950 0.35 136 536 0.25
Mar-03 433 1633 0.27 247 413 0.60

Source : BSE, NSE

SEBI BULLETIN ■ VOL. 1 ■ PART 3 ■ MARCH 2003 ■ 87

 84 SECURITIES AND EXCHANGE BOARD OF INDIA

Table 21 : Trading Frequency in cash segment of BSE & NSE

Month/Year BSE NSE

Scrips Scrips % of Traded Companies Companies % of Traded
Listed* Traded to Listed Avaliable for Traded to Available
Trading* for Trading
Apr-01 9912 2127 21.46 1,031 951 92.24
May-01 9972 2306 23.12 1,030 954 92.62
June-01 10137 2356 23.24 1,001 963 96.20
July -01 10309 2485 24.11 994 924 92.96
Aug-01 10323 2517 24.38 994 931 93.66
Sep-01 10346 2427 23.46 987 917 92.91
Oct-01 10342 2548 24.64 986 917 93.00
Nov-01 10385 2711 26.10 956 920 96.23
Dec-01 13774 3218 23.36 956 895 93.62
Jan-02 8606 2000 23.24 893 896 100.00
Feb-02 7296 2042 27.99 889 840 94.49
Mar-02 7321 2113 28.86 890 840 94.38
Apr-02 7394 2097 28.36 865 843 97.46
May-02 7458 2118 28.40 863 821 95.13
Jun-02 7579 2240 29.56 848 825 97.29
Jul-02 7319 2363 32.29 841 820 97.50
Aug-02 7324 2304 31.46 839 806 96.07
Sep-02 7327 2263 30.89 840 806 95.95
Oct-02 7278 2225 30.57 803 770 95.89
Nov-02 7273 2242 30.83 788 767 97.34
Dec-02 7279 2307 31.69 788 762 96.70
Jan-03 7403 2311 31.22 789 763 96.70
Feb-03 7355 2221 30.20 788 760 96.45
3-Mar-03 7355 1600 21.75 NA NA NA
4-Mar-03 7355 1628 22.13 NA NA NA
5-Mar-03 7355 1600 21.75 NA NA NA
6-Mar-03 7355 1630 22.16 NA NA NA
7-Mar-03 7355 1605 21.82 NA NA NA
10-Mar-03 7355 1529 20.79 NA NA NA
11-Mar-03 7355 1577 21.44 NA NA NA
12-Mar-03 7356 1599 21.74 NA NA NA
13-Mar-03 7356 1633 22.20 NA NA NA
17-Mar-03 7356 1569 21.33 NA NA NA
19-Mar-03 7357 1570 21.34 NA NA NA
20-Mar-03 7357 1570 21.34 NA NA NA
21-Mar-03 7358 1636 22.23 NA NA NA
22-Mar-03 7358 1346 18.29 NA NA NA
24-Mar-03 7361 1614 21.93 NA NA NA
25-Mar-03 7362 1597 21.69 NA NA NA
26-Mar-03 7362 1685 22.89 NA NA NA
27-Mar-03 7362 1472 19.99 NA NA NA
28-Mar-03 7362 1496 20.32 NA NA NA
31-Mar-03 7363 1431 19.44 NA NA NA
Mar-03 7363 2191 29.76 788 762 96.70

*At the end of the period, Includes listed/permitted to trade companies but excludes suspended companies.
Source : BSE, NSE

SEBI BULLETIN ■ VOL. 1 ■ PART 3 ■ MARCH 2003 ■ 88

 Table 22 : Percentage Share of Top ‘N’ Securities/Members in Turnover in Cash Segment

Month/Year BSE NSE

No. of Securities/Members No. of Securities/Members
5 10 25 50 100 5 10 25 50 100
Securities
1992-93 NA NA NA NA NA NA NA NA NA NA
STATISTICAL TABLES

1993-94 NA NA NA NA NA NA NA NA NA NA
1994-95 NA NA NA NA NA 48.77 55.92 68.98 81.14 91.07
1995-96 NA NA NA NA NA 82.98 86.60 90.89 93.54 95.87
1996-97 72.87 81.68 88.10 91.06 93.41 84.55 91.96 95.70 97.03 98.19
1997-98 67.09 79.91 89.00 93.72 96.83 72.98 85.17 92.41 95.76 97.90
1998-99 48.80 64.51 81.07 89.40 95.35 52.56 67.11 84.71 92.03 95.98
1999-00 36.95 55.10 77.75 87.29 92.95 39.56 59.22 82.31 88.69 93.66
2000-01 49.99 70.35 87.70 94.04 97.45 52.15 72.90 88.93 94.57 97.46

SEBI BULLETIN
■
2001-02 30.67 43.94 66.24 81.66 91.51 44.43 62.92 82.24 91.56 95.91
2002-03 37.72 53.27 74.38 86.19 93.26 40.58 55.41 77.80 89.16 95.38

VOL. 1
■
Members
1992-93 5.73 10.39 22.30 36.40 56.37 NA NA NA NA NA

PART 3
1993-94 6.15 10.58 21.05 35.30 55.93 NA NA NA NA NA

■
1994-95 4.59 8.46 17.85 29.59 48.17 18.19 26.60 44.37 61.71 81.12
1995-96 7.23 12.23 24.06 37.88 55.62 10.65 16.56 28.61 41.93 58.59
1996-97 11.82 18.28 31.32 45.55 64.17 5.94 10.08 19.67 30.57 45.95

MARCH 2003
1997-98 13.73 21.06 33.75 47.75 65.21 6.29 10.59 18.81 29.21 44.24

■
1998-99 9.78 16.04 28.31 44.00 64.30 7.73 11.96 20.77 31.66 47.02

89
1999-00 8.42 14.30 25.90 40.74 59.98 7.86 12.99 22.78 34.41 49.96
2000-01 7.87 13.56 25.70 40.40 59.90 7.78 12.76 23.00 33.86 48.79
2001-02 8.45 14.78 28.83 45.30 65.75 7.14 12.29 23.63 36.32 53.40
2002-03 13.65 20.78 35.79 52.85 72.55 10.26 16.41 29.07 42.49 59.15

Source : BSE, NSE

85
 Table 23 : Settlement Statistics for Cash Segment of BSE
Month/Year No. of Traded Delivered % of Turnover
Trades Quantity Quantity Delivered (Rs. mn.)
Delivered
Value
% of
Delivered
Delivered % of Demat
Quantity Delivered
Delivered
Value in
% of Demat
Delivered
Short
Delivery
% of
Short
Unrectified
Bad
% of
Unrectified
Funds
Pay-in
Securities
Pay-in
Trade
Guarantee 86
(Lakh) (Lakh) (Lakh) Quantity (Rs. mn.) Value to in Demat Quantity Demat Value (Auctioned Delivery Delivery Bad (Rs. mn.) (Rs. mn.) Fund
to Traded Total Mode to Total Mode to Total quantity) to (Auctioned Delivery (Rs. mn.)*
Quantity Turnover (Lakh) Delivered (Rs. mn.) Delivered (Lakh) Delivery quantity) to Delivery
Quantity Value (Lakh)
1992-93 125.83 35031 NA NA 456,958 NA NA NA NA NA NA NA NA NA NA NA NA NA

1993-94 122.74 75834 NA NA 845,360 158,608 18.76 NA NA NA NA NA NA NA NA NA NA NA

1994-95 196.37 107,248 44,696 41.68 677,487 266,407 39.32 NA NA NA NA NA NA NA NA NA NA NA
1995-96 171.34 77,185 26,763 34.67 500,642 115,271 23.02 NA NA NA NA NA NA NA NA NA NA NA
1996-97 154.81 80,926 21,188 26.18 1,241,904 109,932 8.85 NA NA NA NA NA NA NA NA NA NA NA
1997-98 195.67 85,877 24,360 28.37 2,071,129 225,119 10.87 NA NA NA NA NA NA NA NA NA NA NA
1998-99 354.35 129,272 50,570 39.12 3,107,497 856,174 27.55 NA NA NA NA NA NA NA NA NA NA NA

1999-00 740.45 208,635 94,312 45.20 6,864,276 1,747,400 25.46 NA NA NA NA NA NA NA NA NA NA NA

2000-01 1,428.15 258,511 86,684 33.53 10,000,315 1,669,409 16.69 NA NA NA NA NA NA NA NA NA NA NA
Apr-01 95.35 13,965 5,947 42.59 238,762 63,018 26.39 NA NA NA NA NA NA NA NA NA NA NA
May-01 119.64 18,125 4,880 26.93 318,683 50,555 15.86 NA NA NA NA NA NA NA NA NA NA NA
Jun-01 104.78 15,407 5,398 35.04 254,508 52,893 20.78 NA NA NA NA NA NA NA NA NA NA NA
Jul-01 77.99 9,933 3,787 38.13 172,440 38,357 22.24 NA NA NA NA NA NA NA NA NA NA NA

SEBI BULLETIN
■
Aug-01 79.08 10,242 2,890 28.22 174,441 31,635 18.13 NA NA NA NA NA NA NA NA NA NA NA
Sep-01 95.21 10,968 3,305 30.13 215,932 34,098 15.79 NA NA NA NA NA NA NA NA NA NA NA
Oct-01 99.80 12,223 3,404 27.85 219,215 37,313 17.02 NA NA NA NA NA NA NA NA NA NA NA

VOL. 1
■
Nov-01 107.27 16,749 5,660 33.79 244,017 48,517 19.88 NA NA NA NA NA NA NA NA NA NA NA
Dec-01 120.47 19,256 5,343 27.75 300,330 48,064 16.00 NA NA NA NA NA NA NA NA NA NA NA
Jan-02 143.82 21,003 5,234 24.92 391,690 66,958 17.09 NA NA NA NA NA NA NA NA NA NA NA

PART 3
■
Feb-02 121.47 18,316 5,948 32.47 285,716 66,491 23.27 NA NA NA NA NA NA NA NA NA NA NA

Mar-02 112.33 16,009 5,872 36.68 257,190 61,905 24.07 NA NA NA NA NA NA NA NA NA NA NA

2001-02 1,277.22 182,196 57,668 31.65 3,072,924 599,803 19.52 NA NA NA NA NA NA NA NA NA NA NA
Apr-02 135.01 18,340 6,657 36.30 288,745 52,654 18.24 NA NA NA NA NA NA NA NA NA NA NA
May-02 139.29 21,794 7,425 34.07 281,378 45,991 16.34 NA NA NA NA NA NA NA NA NA NA NA

MARCH 2003
Jun-02 129.16 27,134 9,938 36.63 233,198 40,247 17.26 NA NA NA NA NA NA NA NA NA NA NA

90■
Jul-02 144.87 28,375 9,837 34.67 267,237 43,165 16.15 NA NA NA NA NA NA NA NA NA NA NA

Aug-02 115.05 15,623 4,298 27.51 237,797 33,523 14.10 NA NA NA NA NA NA NA NA NA NA NA

Sep-02 106.11 15,603 5,119 32.81 244,101 32,504 13.32 NA NA NA NA NA NA NA NA NA NA NA
Oct-02 113.66 15,833 3,880 24.51 276,409 34,854 12.61 NA NA NA NA NA NA NA NA NA NA NA
Nov-02 96.25 13,622 3,767 27.65 259,814 36,642 14.10 NA NA NA NA NA NA NA NA NA NA NA
Dec-02 123.11 18,703 5,894 31.51 305,816 47,854 15.65 NA NA NA NA NA NA NA NA NA NA NA
Jan-03 130.19 19,376 6,078 31.37 308,981 58,363 18.89 NA NA NA NA NA NA NA NA NA NA NA

Feb-03 95.33 14,335 3,632 25.33 234,610 32,511 13.86 3,628 99.89 32,445 99.80 19.35 0.53 0.02 0.00 13,479 32,511 8,035
Mar-03 85.06 12,664 3,368 26.60 202,647 29,105 14.36 3,363 99.85 29,001 99.64 27.53 0.82 0.02 0.00 14,163 29,105 7,483

2002-03 1,413 221,401 69,893 31.57 3,140,732 487,413 15.52 NA NA NA NA NA NA NA NA NA NA 7,483

*Balance at the end of period.

Source : BSE
SECURITIES AND EXCHANGE BOARD OF INDIA
 Table 24 : Settlement Statistics for Cash Segment of NSE
Month/Year No. of Traded Delivered % of Turnover Delivered % of Delivered % of Demat Delivered % of Demat Short % of Unrectified % of Funds Securities Settlement
Trades Quantity Quantity Delivered (Rs. mn.) Value Delivered Quantity Delivered Value in Delivered Delivery Short Bad Unrectified Pay-in Pay-in Guarantee
(Lakh) (Lakh) (Lakh) Quantity (Rs. mn.) Value to in Demat Quantity Demat Value (Auctioned Delivery Delivery Bad (Rs. mn.) (Rs. mn.) Fund
to Traded Total Mode to Total Mode to Total quantity) to (Auctioned Delivery (Rs. mn.)*
Quantity Turnover (Lakh) Delivered (Rs. mn.) Delivered (Lakh) Delivery quantity) to Delivery
Quantity Value (Lakh)

Nov 94-Mar 95 3 1,330 688 51.74 17,280 8,980 51.98 NA NA NA NA 6 0.85 1.76 0.26 3,004 NA NA

1995-96 64 39,010 7,264 18.62 657,420 117,750 17.91 NA NA NA NA 179 2.46 32.17 0.44 32,583 NA NA
STATISTICAL TABLES

1996-97 262 134,317 16,453 12.25 2,923,140 326,400 11.17 NA NA NA NA 382 2.32 66.25 0.40 72,121 NA NA

1997-98 383 135,217 22,051 16.31 3,700,100 597,748 16.15 NA NA NA NA 333 1.51 72.90 0.33 108,272 NA NA

1998-99 550 165,310 27,991 16.93 4,135,730 662,038 16.01 6,179 22.08 115,712 17.48 305 1.09 69.73 0.25 121,754 NA 5,840

1999-00 958 238,605 48,713 20.42 8,030,497 826,070 10.29 26,063 53.50 670,474 81.16 635 1.30 110.13 0.23 279,921 797,828 13,910

2000-01 1614 304,196 50,203 16.50 12,638,978 1,062,774 8.41 47,257 94.13 1,042,463 98.09 339 0.68 11.58 0.023 459,367 949,621 29,160

Apr-01 87 16,323 5,643 34.57 282,261 60,829 21.55 5,620 99.59 60,699 99.79 16 0.28 0.04 0.0008 19,155 52,139 27,510

May-01 155 27,764 6,428 23.15 518,350 73,711 14.22 6,405 99.64 73,531 99.76 15 0.24 0.02 0.0003 19,758 37,519 26,200

Jun-01 127 22,797 5,134 22.52 431,360 59,601 13.82 5,114 99.61 59,454 99.75 14 0.27 0.01 0.0002 16,260 40,579 24,085

Jul-01 97 13,149 2,971 22.59 290,920 37,210 12.79 2,964 99.76 37,170 99.89 21 0.70 0.002 0.0001 18,300 40,205 21,100

SEBI BULLETIN
Aug-01 111 15,512 3,018 19.46 285,720 39,620 13.87 3,006 99.60 39,510 99.72 31 1.03 0.003 0.0001 18,470 35,313 21,020

■
Sep-01 124 16,554 3,136 18.94 337,180 39,330 11.66 3,124 99.62 39,310 99.95 16 0.51 0.00 0.0000 20,680 38,074 18,695

Oct-01 145 19,775 3,485 17.62 352,250 42,470 12.06 3,477 99.77 42,450 99.95 40 1.15 0.00 0.0000 19,540 41,360 18,030

VOL. 1
Nov-01 142 22,647 4,865 21.48 374,710 56,790 15.16 4,855 99.79 56,750 99.93 46 0.95 0.00 0.0000 23,110 54,678 18,758

■
Dec-01 168 29,221 5,929 20.29 530,976 71,844 13.53 5,916 99.78 71,774 99.90 48 0.81 0.00 0.0000 30,347 69,244 18,761

Jan-02 225 38,325 5,729 14.95 713,290 79,400 11.13 5,728 99.98 79,380 99.97 39 0.68 0.00 0.0000 34,400 78,486 18,365

PART 3
Feb-02 170 26,866 6,600 24.57 488,230 79,820 16.35 6,600 100.00 79,820 100.00 39 0.59 0.00 0.0000 30,160 79,353 18,659

■
Mar-02 169 25,762 6,360 24.69 475,962 77,034 16.18 6,360 100.00 77,030 99.99 40 0.62 0.00 0.0000 30,301 76,577 17,880

2001-02 1,720 274,695 59,299 21.59 5,081,208 717,658 14.12 59,169 99.78 716,878 99.89 364 0.61 0.08 0.0001 280,481 643,525 17,880

Apr-02 210 30,113 7,513 24.95 561,302 89,325 15.91 7,513 100.00 89,325 100.00 61 0.81 0.00 0.0000 32,156 88,556 17,450

May-02 211 33,785 8,317 24.62 534,145 87,320 16.35 8,317 100.00 87,320 100.00 55 0.66 0.00 0.0000 31,617 86,758 17,140

MARCH 2003
■
Jun-02 195 39,137 10,232 26.14 463,339 80,005 17.27 10,232 100.00 80,005 100.00 64 0.62 0.00 0.0000 27,277 79,551 17,193

91
Jul-02 206 36,835 10,348 28.09 502,623 84,070 16.73 10,348 100.00 84,070 100.00 69 0.67 0.00 0.0000 29,420 83,577 16,888

Aug-02 193 26,822 5,085 18.96 454,430 53,115 11.69 5,085 100.00 53,115 100.00 30 0.59 0.00 0.0000 21,522 52,748 16,510

Sep-02 183 25,254 4,433 17.55 468,940 52,712 11.24 4,433 100.00 52,712 100.00 25 0.56 0.00 0.0000 23,364 52,355 16,289

Oct-02 201 26,591 4,601 17.30 513,820 57,340 11.16 4,601 100.00 57,340 100.00 21 0.46 0.00 0.0000 25,990 57,043 15,878

Nov-02 174 23,070 4,433 19.22 501,710 64,515 12.86 4,433 100.00 64,515 100.00 23 0.52 0.00 0.0000 26,353 64,110 15,651

Dec-02 223 33,765 7,573 22.43 638,722 88,595 13.87 7,573 100.00 88,595 100.00 35 0.46 0.00 0.0000 33,914 88,233 15,665

Jan-03 231 35,017 8,152 23.28 628,151 91,694 14.60 8,152 100.00 91,694 100.00 38 0.47 0.00 0.0000 33,549 91,279 15,328

Feb-03 193 28,590 6,010 21.02 487,172 67,092 13.77 6,010 100.00 67,092 100.00 23 0.39 0.00 0.0000 26,442 67,092 15,206

Mar-03 182 26,424 5,608 21.22 461,341 63,169 13.69 5608 100.00 63,169 100.00 25 0.44 0.00 0.0000 29,316 63,169 14,867

2002-03 2,403 365,403 82,305 22.52 6,215,694 878,952 14.14 82305 100.00 878,951 100.00 469 0.57 0.00 0.0000 340,919 874,470 14,867

*Balance at the end of period.

87

Source : NSE
 Table 25 : Derivative Segments at BSE

Month/Year No. of Index Futures Stock Futures Index Options Stock Options Total Open Interest at the
88
Trading end of
Days No. of Turnover No. of Turnover No. of Notional No. of Notional No. of Turnover No. of Turnover
Contracts (Rs. mn.) Contracts (Rs. mn.) Contracts Turnover Contracts Turnover Contracts (Rs. mn.) Contracts (Rs. mn.)
(Rs. mn.) (Rs. mn.)

Jun-00 to Mar-01 207 77743 16726 NA NA NA NA NA NA 77743 16726 NA NA

Apr-01 19 1617 281 NA NA NA NA NA NA 1617 281 NA NA
May-01 22 656 118 NA NA NA NA NA NA 656 118 NA NA

Jun-01 21 2261 389 NA NA 447 157 NA NA 2708 546 NA NA

Jul-01 22 2417 406 NA NA 181 60 416 82 3014 549 NA NA

Aug-01 21 29717 4917 NA NA 1604 522 2437 521 33758 5961 NA NA

Sep-01 20 24361 3591 NA NA 113 37 1779 360 26253 3989 NA NA

Oct-01 21 3604 522 NA NA 14 0 347 33 3965 556 NA NA

Nov-01 20 3360 523 3082 790 9 0 239 49 6690 1362 NA NA

Dec-01 19 817 135 3193 697 0 0 133 25 4143 857 NA NA

SEBI BULLETIN
Jan-02 23 1688 284 4089 1104 3 0 212 62 5992 1449 NA NA

■
Feb-02 20 8813 1556 5951 1495 1 0 68 18 14833 3069 NA NA

Mar-02 19 241 41 1636 430 0 0 21 5 1898 477 NA NA

VOL. 1
■
2001-02 247 79552 12763 17951 4516 2372 783 5652 1155 105527 19217 NA NA

Apr-02 22 63 11 955 215 27 6 34 6 1079 238 NA NA

PART 3
May-02 22 608 99 4124 1047 1 0 14 3 4747 1150 NA NA

■
Jun-02 20 752 123 3784 904 0 0 18 0 4554 1031 NA NA

Jul-02 23 54 9 3209 774 0 0 19 4 3282 787 166 34

Aug-02 21 1 0 2036 439 0 0 22 5 2059 444 97 21

MARCH 2003
Sep-02 20 6 1 813 181 0 0 91 21 910 202 45 9

■
Oct-02 21 0 0 611 139 0 0 7 2 618 140 81 20

92
Nov-02 19 0 0 539 131 0 0 7 1 546 132 37 9

Dec-02 21 0 0 591 155 0 0 20 5 611 160 52 13

Jan-03 23 32824 5466 3637 1003 0 0 9 3 36470 6471 322 65

Feb-03 19 35869 5894 3413 897 1 0.3 230 60 39513 6848 215 46

Mar-03 20 41,147 6,507 2,130 559 41 13 330 104 43,648 7,182 375 71

2002-03 251 111,324 18,110 25,842 6,443 70 20 801 212 138,037 24,784 375 71

Note :
1. Notional Turnover = (Strike Price + Premium) * Quantity.
2. Index Futures, Index Options, Stock Options and Stock Futures were introduced in June 2000, June 2001, July 2001 and November 2001, respectively.
Source : BSE
SECURITIES AND EXCHANGE BOARD OF INDIA
 Table 26 : Derivative Segments at NSE

Month/Year No. of Index Futures Stock Futures Index Options Stock Options Total Open Interest at
the end of
Trading Call Put Call Put
Days No. of Turnover No. of Turnover No. of Notional No. of Notional No. of Notional No. of Notional No. of Turnover No. of Turnover
Contracts (Rs. mn.) Contracts (Rs. mn.) Contracts Turnover Contracts Turnover Contracts Turnover Contracts Turnover Contracts (Rs. mn.) Contracts (Rs. mn.)
(Rs. mn.) (Rs. mn.) (Rs. mn.) (Rs. mn.)

Jun-00 to
Mar-01 211 90,580 23,650 NA NA NA NA NA NA NA NA NA NA 90,580 23,650 NA NA
STATISTICAL TABLES

Apr-01 19 13,274 2,917 NA NA NA NA NA NA NA NA NA NA 13,274 2,917 1,430 319

May-01 22 10,048 2,305 NA NA NA NA NA NA NA NA NA NA 10,048 2,305 2,033 471

Jun-01 21 26,805 5,902 NA NA 5,232 1,185 3,429 766 NA NA NA NA 35,466 7,854 4,071 904

Jul-01 22 60,644 13,086 NA NA 8,613 1,908 6,221 1,352 13,082 2,902 4,746 1,057 93,306 20,306 14,040 2,948

Aug-01 21 60,979 13,046 NA NA 7,598 1,653 5,533 1,193 38,971 8,437 12,508 2,633 125,589 26,962 19,096 3,961

Sep-01 20 154,298 28,571 NA NA 12,188 2,432 8,262 1,687 64,344 13,221 33,480 6,900 272,572 52,810 16,204 2,780

Oct-01 21 131,467 24,848 NA NA 16,787 3,263 12,324 2,329 85,844 16,319 43,787 8,015 290,209 54,775 25,051 4,628

Nov-01 20 121,697 24,835 125,946 28,114 14,994 3,099 7,189 1,453 112,499 23,722 31,484 6,379 413,809 87,601 60,414 13,291

Dec-01 19 109,303 23,393 309,755 75,147 12,890 2,866 5,513 1,184 84,134 19,859 28,425 6,740 550,020 129,187 37,891 8,024

SEBI BULLETIN
Jan-02 23 122,182 26,598 489,793 132,610 11,285 2,528 3,933 853 133,947 38,361 44,498 12,529 805,638 213,479 78,384 17,753

■
Feb-02 20 120,662 27,472 528,947 139,395 13,941 3,235 4,749 1,068 133,630 36,347 33,055 8,643 834,984 216,159 89,560 20,104

Mar-02 19 94,229 21,846 503,415 139,890 10,446 2,487 4,773 1,113 101,708 28,628 37,387 10,936 751,958 204,899 93,917 21,499

VOL. 1
■
2001-02 247 1,025,588 214,819 1,957,856 515,155 113,974 24,657 61,926 12,998 768,159 187,795 269,370 63,830 4,196,873 1,019,254 93,917 21,499

Apr-02 22 73,635 16,562 552,727 150,651 11,183 2,600 5,389 1,215 121,225 34,004 40,443 11,704 804,602 216,736 66,922 15,540

PART 3
May-02 22 94,312 20,223 605,284 159,810 13,070 2,945 7,719 1,687 126,867 34,901 57,984 16,432 905,236 235,998 55,839 12,053

■
Jun-02 20 99,514 21,228 616,461 161,783 10,272 2,229 7,805 1,662 123,493 33,246 48,919 13,173 906,464 233,320 65,834 15,315

Jul-02 23 122,663 25,133 789,290 212,047 16,637 3,498 7,688 1,616 154,089 43,406 65,530 18,369 1,155,897 304,069 85,369 17,997

Aug-02 21 152,375 29,778 726,310 178,806 15,967 3,178 10,124 2,000 147,646 38,367 65,630 17,255 1,118,052 269,383 71,655 16,602

Sep-02 20 144,303 28,357 700,051 175,011 16,578 3,318 12,543 2,507 151,291 40,160 80,038 22,051 1,104,804 271,404 67,261 13,858

MARCH 2003
■
Oct-02 21 164,934 31,448 856,930 212,134 23,628 4,594 13,910 2,671 214,027 55,953 104,659 27,612 1,378,088 334,413 135,239 30,228

93
Nov-02 19 175,567 35,000 970,251 254,630 25,413 5,090 17,191 3,360 261,600 71,060 104,529 29,220 1,554,551 398,360 94,615 22,134

Dec-02 21 277,403 59,580 1,217,873 355,316 30,261 6,601 19,973 4,274 309,573 95,524 111,756 34,907 1,966,839 556,201 110,431 28,933

Jan-03 23 258,955 55,570 1,304,122 382,990 26,376 5,770 16,805 3,630 322,876 101,740 132,021 41790 2,061,155 591,490 100,764 23,888

Feb-03 19 237,803 50,403 1,198,564 324,448 26,501 5,711 17,681 3,749 268,156 76,444 114,512 33,192 1,863,217 493,948 109,192 27,378

Mar-03 20 325,299 66,237 1,138,980 297,698 53,788 11,165 35,739 7,397 255,658 71,634 140,540 39,186 1,950,004 493,317 97,025 21,943

2002-03 251 2,126,763 439,515 10,675,786 2,865,319 269,721 56,710 172,520 35,766 2,456,501 696,445 1,066,561 304,895 16,767,852 4,398,650 97,025 21,943

Note:
1. Index Futures, Index Options, Stock Options and Stock Futures were introduced in June 2000, June 2001, July 2001 and November 2001, respectively.
2. Notional Turnover = (Strike Price + Premium) * Quantity.
3. Open Interest (Turnover) = No. of outstanding contracts * close value or price of the underlying.
89

Source : NSE
 Table 27: Derivatives Trading at BSE, March 2003

Date Index Futures Stock Futures Index Options Stock Options Total Open Interest
90
Calls Puts Calls Puts at the end of

No. of Turnover No. of Turnover No. of Notional No. of Notional No. of Notional No. of Notional No. of Turnover No. of Turnover
Contracts (Rs. mn.) Contracts (Rs. mn.) Contracts Turnover Contracts Turnover Contracts Turnover Contracts Turnover Contracts (Rs. mn.) Contracts (Rs. mn.)
(Rs. mn.) (Rs. mn.) (Rs. mn.) (Rs. mn.)

3-Mar-03 1,932 320 124 36 0 0 0 0 10 2 0 0 2,066 357 289 59

4-Mar-03 1,584 259 52 15 0 0 0 0 11 3 0 0 1,647 277 278 57

5-Mar-03 2,133 344 107 29 0 0 0 0 40 10 0 0 2,280 384 344 72

6-Mar-03 1,866 301 44 13 0 0 0 0 24 7 0 0 1,934 320 408 81

7-Mar-03 1,873 297 66 19 0 0 1 0.33 30 8 0 0 1,970 324 429 83

10-Mar-03 1,966 309 84 20 0 0 0 0 0 0 0 0 2,050 329 503 93

11-Mar-03 2,243 352 211 56 0 0 0 0 0 0 0 0 2,454 408 456 87

12-Mar-03 2,501 393 90 28 0 0 0 0 20 5 0 0 2,611 426 375 75

13-Mar-03 2,249 350 56 16 20 6 0 0 118 48 0 0 2,443 420 423 87

17-Mar-03 1,962 302 33 8 20 6 0 0 1 0.4 0 0 2,016 316 388 78

SEBI BULLETIN
19-Mar-03 1,568 244 17 6 0 0 0 0 26 6 0 0 1,611 256 473 96

■
20-Mar-03 2,590 409 62 15 0 0 0 0 15 6 0 0 2,667 430 445 91

21-Mar-03 2,610 416 150 40 0 0 0 0 0 0 0 0 2,760 456 441 95

VOL. 1
■
22-Mar-03 1,305 210 13 4 0 0 0 0 10 3 0 0 1,328 216 453 96

24-Mar-03 2,784 441 300 78 0 0 0 0 22 6 0 0 3,106 525 504 104

25-Mar-03 2,703 423 165 47 0 0 0 0 0 0 0 0 2,868 470 476 100

PART 3
■
26-Mar-03 2,614 412 112 29 0 0 0 0 1 0.26 0 0 2,727 440 520 106

27-Mar-03 2,380 373 337 77 0 0 0 0 0 0 0 0 2,717 450 368 76

28-Mar-03 1,510 235 49 11 0 0 0 0 1 0.19 1 0 1,561 247 341 68

31-Mar-03 774 119 58 13 0 0 0 0 0 0 0 0 832 132 375 71

MARCH 2003
Mar-03 41,147 6,507 2,130 559 40 13 1 0 329 103 1 0 43,648 7,182 375 71

94■
Source : BSE
SECURITIES AND EXCHANGE BOARD OF INDIA
 Table 28: Derivatives Trading at NSE, March 2003

Date Index Futures Stock Futures Index Options Stock Options Total Open Interest at the
end of
Calls Puts Calls Puts

No. of Turnover No. of Turnover No. of Notional No. of Notional No. of Notional No. of Notional No. of Turnover No. of Turnover
Contracts (Rs. mn.) Contracts (Rs. mn.) Contracts Turnover Contracts Turnover Contracts Turnover Contracts Turnover Contracts (Rs. mn.) Contracts (Rs. mn.)
(Rs. mn.) (Rs. mn.) (Rs. mn.) (Rs. mn.)

3-Mar-03 11,935 2,552 62,108 16,937 2,164 471 1,108 236 12,815 3,678 5,574 1,573 95,704 25,447 117,079 29,042
STATISTICAL TABLES

4-Mar-03 12,442 2,629 47,461 13,197 2,600 560 1,359 288 11,669 3,402 5,244 1,565 80,775 21,641 123,538 30,226

5-Mar-03 19,038 3,974 62,945 16,528 2,800 596 2,036 430 15,455 4,373 6,966 1,950 109,240 27,852 129,459 31,531

6-Mar-03 13,383 2,780 51,165 13,854 1,902 403 1,255 264 10,717 3,039 5,327 1,527 83,749 21,867 134,572 32,291

7-Mar-03 16,040 3,286 54,301 14,389 3,310 694 2,328 488 15,172 4,306 8,728 2,462 99,879 25,625 138,219 32,614

10-Mar-03 19,508 3,960 50,665 13,043 2,794 581 2,028 423 12,037 3,299 7,204 1,957 94,236 23,263 144,130 33,452

11-Mar-03 18,855 3,808 63,538 16,405 3,353 691 2,290 473 13,756 3,814 7,231 2,067 109,023 27,258 148,033 34,796

12-Mar-03 17,556 3,551 61,222 15,683 2,616 539 1,620 335 12,419 3,364 6,692 1,810 102,125 25,282 149,198 34,670

13-Mar-03 15,674 3,141 55,520 14,080 2,618 536 1,681 345 12,680 3,423 7,911 2,131 96,084 23,657 152,559 35,297

17-Mar-03 15,074 2,991 51,417 13,536 2,930 598 2,470 507 12,828 3,619 8,272 2,260 92,991 23,510 154,488 35,702

SEBI BULLETIN
■
19-Mar-03 13,442 2,703 53,926 14,440 2,263 463 1,526 310 12,361 3,602 7,606 2,196 91,124 23,714 155,975 36,632

20-Mar-03 21,393 4,343 73,176 19,073 3,227 666 2,315 473 16,267 4,672 8,840 2,615 125,218 31,842 158,364 38,500

VOL. 1
21-Mar-03 15,675 3,221 62,449 17,039 3,586 744 2,007 412 14,924 4,466 6,631 2,019 105,272 27,901 158,364 38,780

■
22-Mar-03 7,436 1,541 28,161 7,587 2,106 440 867 179 7,651 2,163 3,420 985 49,641 12,894 159,378 39,389

24-Mar-03 19,798 4,044 59,341 15,497 3,622 749 1,953 403 12,280 3,495 7,139 2,025 104,133 26,212 158,777 38,214

PART 3
■
25-Mar-03 21,340 4,303 69,279 18,240 2,433 499 2,485 514 12,447 3,507 8,287 2,304 116,271 29,367 158,828 37,939

26-Mar-03 22,290 4,528 60,376 15,368 1,868 384 1,302 268 11,527 3,168 6,691 1,759 104,054 25,475 160,969 38,474

27-Mar-03 17,687 3,568 76,412 19,296 2,003 410 1,582 327 14,193 3,798 10,162 2,647 122,039 30,047 168,741 39,749

28-Mar-03 13,263 2,656 45,903 11,199 2,214 454 1,782 370 11,563 3,010 5,388 1,409 80,113 19,098 87,932 20,395

MARCH 2003
31-Mar-03 13,470 2,659 49,615 12,309 3,379 687 1,745 352 12,897 3,436 7,227 1,923 88,333 21,365 97,025 21,943

95■
Mar-03 325,299 66,237 1,138,980 297,698 53,788 11,165 35,739 7,397 255,658 71,634 140,540 39,186 1,950,004 493,317 97,025 21,943

1. Notional Turnover = (Strike Price + Premium) * Quantity.

2. Open Interest (Turnover) = No. of outstanding contracts * close value or price of the underlying.
Source: NSE
91
 Table 29: Settlement Statistics in Derivatives Segment

92
(Rs. mn.)

Month/Year BSE NSE

Index/Stock Futures Index/Stock Options Total Settlement Index/Stock Futures Index/Stock Options Total Settlement
MTM Final Premium Exercise Guarantee MTM Final Premium Exercise Guarantee
Settlement Settlement Settlement Settlement Fund* Settlement Settlement Settlement Settlement Fund*
Jun-00 5 0 NA NA 5 399 2 0 NA NA 2 NA
Jul-00 37 1 NA NA 38 435 15 0 NA NA 15 NA
Aug-00 35 2 NA NA 37 518 8 0 NA NA 8 NA
Sep-00 43 1 NA NA 44 542 21 1 NA NA 22 NA
Oct-00 44 2 NA NA 47 557 34 3 NA NA 37 NA
Nov-00 63 1 NA NA 64 611 47 1 NA NA 47 NA
Dec-00 40 1 NA NA 41 603 98 7 NA NA 105 NA
Jan-01 68 1 NA NA 69 612 119 1 NA NA 120 NA
Feb-01 85 2 NA NA 88 671 161 5 NA NA 167 NA
Mar-01 84 0 NA NA 84 655 336 1 NA NA 336 NA
2000-01 505 11 NA NA 517 655 841 19 NA NA 860 NA
Apr-01 15 0 NA NA 16 635 80 1 NA NA 81 NA
May-01 0 0 NA NA 0 632 38 1 NA NA 39 NA

SEBI BULLETIN
■
Jun-01 8 0 6.6 1.4 16 710 49 0 15 3 66 NA
Jul-01 8 0 6.1 2.0 17 700 67 1 59 14 141 NA
Aug-01 13 0 17.1 3.2 34 721 46 1 98 51 196 NA

VOL. 1
Sep-01 61 7 13.1 12.1 93 677 337 5 156 139 637 NA

■
Oct-01 8 1 2.4 4.0 15 648 113 1 180 114 408 NA
Nov-01 23 0 2.4 3.0 29 640 284 7 246 202 739 NA

PART 3
Dec-01 38 1 1.0 0.1 41 628 789 38 175 82 1,084 NA

■
Jan-02 42 2 2.0 0.4 46 587 1,125 22 306 178 1,630 NA
Feb-02 25 2 0.4 0.0 27 592 1,089 122 244 89 1,543 NA
Mar-02 16 1 0.2 0.1 17 493 1,036 20 170 68 1,294 6,480
2001-02 258 15 51.3 26.2 351 493 5,052 219 1,648 939 7,859 6,480
Apr-02 8 1 0.2 0.1 9 484 1,066 42 173 87 1,367 6,550

MARCH 2003
May-02 18 1 0.0 0.0 19 497 1,665 18 215 144 2,043 6,820

■
Jun-02 10 0 0.1 0.0 10 491 1,241 34 197 104 1,575 7,140

96
Jul-02 12 0 0.1 0.0 12 474 1,609 17 236 107 1,969 7,250
Aug-02 8 0 0.2 0.0 8 466 1,021 29 205 139 1,393 8,190
Sep-02 6 0 0.4 0.0 7 461 1,198 14 233 135 1,580 8,220
Oct-02 3 0 0.1 0.0 4 458 1,282 78 258 166 1,785 8,419
Nov-02 3 0 0.1 0.0 4 455 1,109 87 337 353 1,887 9,840
Dec-02 3 0 0.0 0.1 3 440 1,640 53 446 168 2,308 10,742
Jan-03 21 1 0.1 0.0 22 514 2,184 30 384 229 2,827 13,154
Feb-03 14 1 0.8 0.0 15 515 1,484 17 289 131 1,923 13,779
Mar-03 17 0 1.5 0.0 19 495 1,879 38 338 196 2,452 13,002
2002-03 122 6 3.5 0.2 131 495 17,379 458 3,312 1,959 23,109 13,002

* Balance at the end of period

Source: BSE, NSE
SECURITIES AND EXCHANGE BOARD OF INDIA
 STATISTICAL TABLES 93
Table 30: Trends in FII Investment

Period Gross Gross Sales Net Investment Net Investment** Cumulative Net
Purchases (Rs. mn.) (Rs. mn.) (US $ mn.) Investment**
(Rs. mn.) (US $ mn.)
1992-93 174 40 134 4 4
1993-94 55,925 4,663 51,262 1,634 1,638
1994-95 76,310 28,348 47,963 1,528 3,167
1995-96 96,935 27,517 69,420 2,036 5,202
1996-97 155,539 69,794 85,745 2,432 7,634
1997-98 186,947 127,372 59,575 1,649 9,284
1998-99 161,150 176,994 -15,844 -386 8,898
1999-2000 568,555 467,335 101,219 2,339 11,237
2000-01 740,506 641,164 99,340 2,160 13,396
Apr-01 50,799 31,011 19,788 425 13,821
May-01 39,760 33,000 6,761 144 13,965
Jun-01 41,189 29,392 11,797 251 14,217
Jul-01 36,650 31,873 4,777 102 14,318
Aug-01 32,485 27,463 5,023 107 14,425
Sep-01 32,201 37,605 -5,405 -113 14,312
Oct-01 38,957 30,113 8,844 186 14,497
Nov-01 39,742 39,705 37 1 14,498
Dec-01 34,554 32,275 2,279 48 14,545
Jan-02 54,460 47,467 6,993 146 14,691
Feb-02 58,162 34,794 23,368 484 15,175
Mar-02 40,241 36,952 3,290 68 15,242
2001-02 499,200 411,650 87,552 1,846 15,242
Apr-02 51,090 52,210 -1,120 -23 15,219
May-02 43,540 43,080 460 9 15,229
Jun-02 33,510 42,170 -8,660 -177 15,052
Jul-02 35,000 32,620 2,380 49 15,101
Aug-02 26,680 24,940 1,740 36 15,136
Sep-02 37,657 34,432 3,224 67 15,203
Oct-02 28,129 36,878 -8,751 -181 15,023
Nov-02 41,353 33,977 7,376 152 15,175
Dec-02 42,873 36,398 6,479 134 15,309
Jan-03 53,145 43,292 9,852 205 15,514
Feb-03 34,707 30,421 4,281 89 15,603
Mar-03 42,917 33,292 9,628 202 15,804
2002-03 470,601 443,710 26,889 562 15,804

** Net Investment in US $ mn. at monthly exchange rate.

SEBI BULLETIN ■ VOL. 1 ■ PART 3 ■ MARCH 2003 ■ 97

 Table 31: Daily Trends in Foreign Institutional Investment, March 2003

Days Equity Debt Total 94

Gross Gross Net Net Gross Gross Net Net Gross Gross Net Net
Purchase Sales Investment Investment Purchase Sales Investment Investment Purchase Sales Investment Investment
(Rs. mn.) (Rs. mn.) (Rs. mn.) (US $ mn.) (Rs. mn.) (Rs. mn.) (Rs. mn.) (US $ mn.) (Rs. mn.) (Rs. mn.) (Rs. mn.) (US $ mn.)
3-Mar-2003 3,623 1,875 1,748 37 267 1 267 6 3,890 1,876 2,015 42
4-Mar-2003 1,321 1,076 245 5 0 0 0 0 1,321 1,076 245 5
5-Mar-2003 1,009 1,312 -303 -6 1,179 0 1,179 25 2,188 1,312 876 18
6-Mar-2003 1,123 1,311 -189 -4 0 0 0 0 1,123 1,311 -189 -4
7-Mar-2003 958 975 -17 0 0 0 0 0 958 975 -17 0
10-Mar-2003 1,443 1,684 -241 -5 0 0 0 0 1,443 1,684 -241 -5
11-Mar-2003 1,458 1,102 356 8 0 0 0 0 1,458 1,102 356 8
12-Mar-2003 1,118 1,039 79 2 0 0 0 0 1,118 1,039 79 2
13-Mar-2003 857 997 -141 -3 0 0 0 0 857 997 -141 -3

SEBI BULLETIN
17-Mar-2003 1,551 2,224 -673 -14 0 0 0 0 1,551 2,224 -673 -14

■
19-Mar-2003 1,728 2,570 -841 -18 1,908 1,813 95 2 3,636 4,383 -746 -16
20-Mar-2003 3,313 2,474 839 18 0 0 0 0 3,313 2,474 839 18

VOL. 1
■
21-Mar-2003 3,426 1,859 1,568 33 0 250 -250 -5 3,426 2,109 1,318 28
24-Mar-2003 1,716 1,276 440 9 3,400 0 3,400 71 5,116 1,276 3,840 80

PART 3
25-Mar-2003 1,985 1,585 400 8 0 0 0 0 1,985 1,585 400 8

■
26-Mar-2003 1,114 1,260 -146 -3 1,062 1,701 -640 -13 2,176 2,961 -786 -17
27-Mar-2003 1,457 1,705 -248 -5 1,486 0 1,486 31 2,943 1,705 1,238 26
28-Mar-2003 2,128 1,693 436 9 0 26 -26 -1 2,128 1,719 410 9

MARCH 2003
■
31-Mar-2003 2,287 1,483 805 17 0 0 0 0 2,287 1,483 805 17

98
Total 33,614 29,501 4,117 86 9,302 3,791 5,511 115 42,917 33,292 9,628 202
SECURITIES AND EXCHANGE BOARD OF INDIA
 Table 32 : Trends in Mutual Funds Resource Mobilisation
(Amount in Rs. mn.)

Period Gross Redemption* Net Inflow Assets at the

End of
Pvt. Sec. Public Sector UTI Total Pvt. Sec. Public Sector UTI Total Pvt. Sec. Public Sector UTI Total
1993-94 15,490 95,265 510,000 620,755 NA NA NA NA NA NA NA NA NA
1994-95 20,840 21,430 95,000 137,270 NA NA NA NA NA NA NA NA NA
1995-96 3,120 2,960 59,000 65,080 NA NA NA NA NA NA NA NA NA
STATISTICAL TABLES

1996-97 3,460 1,510 42,800 47,770 NA NA NA NA NA NA NA NA NA

1997-98 19,740 3,320 91,000 114,060 NA NA NA NA NA NA NA NA NA
1998-99 78,465 16,713 131,929 227,107 63,938 13,362 159,304 236,604 14,527 3,352 -27,375 -9,497 681,931
1999-2000 437,257 38,171 136,984 612,412 285,592 45,621 91,501 422,714 151,665 -7,449 45,483 189,699 1,079,461
2000-01 750,091 55,353 124,130 929,574 651,595 65,798 120,900 838,293 98,496 -10,445 3,230 91,281 905,869
Apr-01 71,040 3,442 4,500 78,982 49,124 1,998 7,470 58,592 21,916 1,444 -2,970 20,390 931,007
May-01 64,303 7,462 3,760 75,525 36,555 3,738 23,020 63,312 27,748 3,725 -19,260 12,213 967,953
Jun-01 98,884 13,938 18,580 131,401 67,870 4,120 22,650 94,641 31,013 9,818 -4,070 36,761 979,528
Jul-01 113,291 800 2,370 116,461 88,339 5,931 8,730 103,000 24,952 -5,131 -6,360 13,461 989,694

SEBI BULLETIN
Aug-01 95,022 7,240 1,670 103,933 82,415 6,153 6,330 94,898 12,607 1,087 -4,660 9,034 993,358

■
Sep-01 120,960 10,885 2,310 134,154 145,717 10,191 4,260 160,168 -24,757 693 -1,950 -26,014 918,106
Oct-01 104,658 6,813 1,320 112,791 92,378 6,047 10,950 109,375 12,280 766 -9,630 3,416 945,701

VOL. 1
Nov-01 103,317 8,470 1,200 112,987 86,451 5,600 2,760 94,811 16,867 2,870 -1,560 18,176 998,413

■
Dec-01 153,142 14,415 2,870 170,427 132,657 10,942 3,927 147,525 20,486 3,473 -1,057 22,902 1,018,218
Jan-02 138,113 14,479 2,530 155,122 123,064 12,812 15,694 151,570 15,049 1,666 -13,164 3,552 1,041,149

PART 3
Feb-02 188,064 14,164 3,060 205,288 172,903 13,111 5,920 191,935 15,161 1,052 -2,860 13,353 1,068,141

■
Mar-02 227,188 18,712 2,260 248,161 270,011 26,082 7,560 303,653 -42,822 -7,370 -5,300 -55,492 1,005,942
2001-02 1,477,983 120,819 46,430 1,645,232 1,347,484 106,726 119,270 1,573,480 130,499 14,093 -72,840 71,752 1,005,942
Apr-02 195,645 12,236 2,000 209,882 173,739 10,926 7,490 192,156 21,906 1,310 -5,490 17,726 1,028,308
May-02 163,851 11,944 2,070 177,865 143,645 10,073 19,480 173,198 20,207 1,870 -17,410 4,667 1,022,310

MARCH 2003
■
Jun-02 163,841 12,220 2,430 178,491 160,002 12,623 36,580 209,206 3,839 -403 -34,150 -30,714 1,007,035

99
Jul-02 204,479 17,386 3,110 224,975 184,411 13,750 6,457 204,619 20,067 3,636 -3,347 20,356 1,023,936
Aug-02 191,894 17,316 3,923 213,134 158,261 12,144 4,730 175,135 33,633 5,173 -807 37,998 1,076,211
Sep-02 219,133 16,737 8,299 244,169 208,796 15,512 13,458 237,765 10,336 1,226 -5,158 6,404 1,069,295
Oct-02 250,370 20,975 11,845 283,190 200,606 15,490 8,471 224,566 49,765 5,485 3,374 58,624 1,131,528
Nov-02 260,453 25,135 10,118 295,707 208,761 17,567 20,753 247,081 51,693 7,568 -10,635 48,625 1,213,928
Dec-02 279,132 24,957 4,593 308,682 289,263 20,029 8,724 318,016 -10,131 4,928 -4,131 -9,334 1,226,003
Jan-03 313,381 33,653 6,659 353,693 289,914 35,902 16,109 341,926 23,467 -2,250 -9,450 11,767 1,218,056
Feb-03 275,184 18,820 7,709 301,714 329,379 24,986 11,786 366,151 -54,195 -6,166 -4,077 -64,437 1,170,253
Mar-03 323,591 23,769 8,202 355,561 373,483 30,536 11,262 415,280 -49,892 -6,767 -3,060 -59,719 1,092,994
2002-03 2,840,955 235,149 70,958 3,147,062 2,720,260 219,538 165,299 3,105,098 120,694 15,611 -94,341 41,964 1,092,994

*Includes repurchases as well as redemption

95
 Table 33A : Scheme-Wise Resource Mobilisation by Mutual Funds

96
(Rs. mn.)

Scheme 2000-01 2001-02 2002-03 Net Assets as on

Sale Purchase Net Sale Purchase Net Sale Purchase Net 31-Mar-03

Open-ended 911,059 787,876 123,183 1,631,440 1,539,245 92,196 3,142,393 3,020,523 121,871 894,814
Close-ended 18,515 50,417 -31,902 13,792 34,235 -20,444 4,669 84,575 -79,907 198,180
Total 929,574 838,293 91,281 1,645,232 1,573,480 71,752 3,147,062 3,105,098 41,964 1,092,994

Table 33B : Scheme-Wise Resource Mobilisation by Mutual Funds

(Rs. mn.)

Scheme 2000-01 2001-02 2002-03

Sale Purchase Net Sale Purchase Net Sale Purchase Net
A. Income/Debt Oriented Schemes (i+ii+iii+iv) 670,463 599,552 70,910 1,620,065 1,489,420 130,644 3,096,722 3,038,916 57,806
i. Liquid/Money Market 362117 336481 25636 1045462 1012548 32914 1950471 1900422 50050

SEBI BULLETIN
■
ii. Gilt 41605 44723 -3117 64387 48754 15633 52017 58922 -6905
iii. Debt (other than assure return) 260600 201727 58873 496336 424395 71941 1094234 1008724 85510

VOL. 1
■
iv. Debt (assured return) 6140 16622 -10482 13880 3724 10156 0 70849 -70849
B. Growth/Equity Oriented Schemes (i+ii) 182,106 189,554 -7,448 20,398 25,746 -5,348 46,396 45,963 433

PART 3
i. ELSS 2,140 6,563 -4,423 327 3,144 -2,817 216 6,789 -6,573

■
ii. Others 179,966 182,991 -3,025 20,071 22,602 -2,531 46,180 39,174 7,007
C. Balanced Schemes 77,005 49,187 27,819 4,769 58,313 -53,544 3,944 20,219 -16,275
Total (A+B+C) 929,574 838,293 91,281 1,645,232 1,573,480 71,752 3,147,062 3,105,098 41,964

MARCH 2003
■
100
SECURITIES AND EXCHANGE BOARD OF INDIA
 Table 34 : Trends in Transactions on Stock Exchanges by Mutual Funds
(Rs. mn.)

Period Equity Debt Total

Gross Purchase Gross Sales Net Purchase/Sales Gross Purchase Gross Sales Net Purchase/Sales Gross Purchase Gross Sales Net Purchase/Sales

2000-01 173758 201428 -27670 135122 84887 50235 308880 286314 22565
Apr-01 7,465 10,395 -2,930 14,645 7,150 7,495 22,110 17,545 4,566
STATISTICAL TABLES

May-01 9,944 14,732 -4,788 25,483 14,068 11,414 35,426 28,800 6,626
Jun-01 6,586 7,706 -1,121 25,195 18,381 6,814 31,780 26,087 5,693

Jul-01 4,753 9,202 -4,449 25,535 14,763 10,773 30,289 23,965 6,324
Aug-01 6,437 10,213 -3,775 29,520 17,796 11,724 35,957 28,009 7,949

Sep-01 8,785 7,669 1,116 16,146 18,764 -2,618 24,931 26,434 -1,503
Oct-01 7,514 14,258 -6,744 26,260 16,489 9,772 33,775 30,747 3,028

Nov-01 10,035 13,484 -3,450 32,817 16,320 16,497 42,851 29,804 13,047
Dec-01 13,404 12,638 766 26,178 16,752 9,426 39,583 29,391 10,192

SEBI BULLETIN
■
Jan-02 17,222 21,571 -4,349 49,223 28,245 20,978 66,445 49,816 16,629
Feb-02 17,053 20,570 -3,518 38,913 30,850 8,064 55,966 51,420 4,546

VOL. 1
Mar-02 11,783 16,501 -4,718 25,659 26,365 -706 37,442 42,866 -5,424

■
2001-02 120,981 158,940 -37,959 335,573 225,942 109,632 456,555 384,882 71,673

Apr-02 13,001 16,826 -3,826 31,543 17,103 14,439 44,543 33,930 10,614

PART 3
■
May-02 13,662 15,062 -1,400 25,119 20,849 4,270 38,781 35,911 2,870

Jun-02 10,832 14,777 -3,945 32,669 23,608 9,061 43,501 38,386 5,116
Jul-02 14,446 17,324 -2,878 42,327 25,378 16,949 56,773 42,702 14,072

Aug-02 10,202 12,229 -2,027 42,612 27,772 14,840 52,814 40,000 12,814

MARCH 2003
■
Sep-02 9,595 9,314 281 39,524 29,629 9,894 49,119 38,943 10,176

101
Oct-02 12,476 12,920 -444 55,980 31,576 24,404 68,457 44,497 23,960
Nov-02 10,594 13,949 -3,355 46,378 23,875 22,503 56,972 37,824 19,148

Dec-02 14,124 14,099 24 40,215 37,962 2,252 54,338 52,061 2,277

Jan-03 15,342 19,372 -4,030 52,590 41,085 11,505 67,932 60,458 7,474

Feb-03 10,777 10,466 311 31,153 36,120 -4,966 41,930 46,586 -4,655
Mar-03 10,157 9,536 621 26,530 25,637 893 36,687 35,173 1,514

2002-03 145,209 165,876 -20,667 466,638 340,594 126,044 611,847 506,470 105,377
97
 Table 35 : Substantial Acquisition of Shares and Takeovers

98
(Value in Rs. mn.)

Year Open Offers Automatic Exemption

Objectives Total Number Value
Change in Control of Consolidation of Substantial Acquisition
Management Holdings
Number Value Number Value Number Value Number Value
1997-98 17 1,428.5 10 3,398.3 13 956.3 40 5,783.1 93 35,022.2
1998-99 29 996.8 25 5,869.3 12 3,270.6 66 10,136.7 201 18,881.0
1999-2000 43 2,602.6 9 710.7 23 1,299.9 75 4,613.3 252 46,774.0
2000-01 70 11,404.2 5 1,889.9 2 424.8 77 13,719.0 248 48,731.8
2001-02 54 17,560.0 26 18,150.0 1 390.0 81 36,100.0 276 25,390.4
Apr-02 8 18,471.9 3 110.7 0 0.0 11 18,582.6 52 7,256.5
May-02 9 3,850.6 4 5,076.8 1 0.8 14 8,928.2 22 913.5

SEBI BULLETIN
■
Jun-02 2 150.4 6 2,269.7 0 0.0 8 2,420.1 10 538.5
Jul-02 3 11,557.0 1 24.4 0 0.0 4 11,581.4 20 1,194.9

VOL. 1
Aug-02 5 2,046.3 1 0.8 0 0.0 6 2,047.1 25 3,631.2

■
Sep-02 1 17.4 3 2,902.8 0 0.0 4 2,920.2 28 5,988.3
Oct-02 0.0 4 2,986.0 0 0.0 4 2,986.0 27 1,317.7

PART 3
■
Nov-02 3 911.4 4 511.2 0 0.0 7 1,422.6 10 526.1
Dec-02 3 348.5 4 2,048.5 0 0.0 7 2,397.0 12 743.5
Jan-03 5 769.8 4 8,919.9 1 13.4 10 9,703.1 14 407.6
Feb-03 5 16.7 4 226.7 0 0.0 9 243.4 9 771.2

MARCH 2003
■
Mar-03 2 4.1 2 654.9 0 0.0 4 659.0 9 994.9

102
2002-03 46 38,144.2 40 25,732.6 2 14.2 88 63,891.0 238 24,283.8
SECURITIES AND EXCHANGE BOARD OF INDIA
 Table 36 : Progress of Dematerialisation at NSDL and CDSL

At the end of NSDL CDSL

the period Cos- Cos-Live DPs-Live DPs- Mkt. Cap. Demat Cos- Cos-Live DPs-Live DPs- Mkt. Cap. Demat
Agreement Locations (Rs. mn.)* Quantity Agreement Locations (Rs. mn.)# Quantity
Signed (million Signed (million
shares) shares)
1996-97 40 23 24 24 908,180 22 NA NA NA NA NA NA
1997-98 191 171 49 200 2,883,470 1,763 NA NA NA NA NA NA
STATISTICAL TABLES

1998-99 375 365 84 750 3,965,510 7,109 15 15 NA NA NA NA

1999-2000 918 821 124 1,425 7,658,754 15,501 541 541 NA NA NA NA
2000-01 2,821 2,786 186 1,896 5,553,757 37,208 2,723 2,703 137 132 109,060 1,920
Apr-01 2,909 2,848 190 1,902 5,503,064 38,048 2,821 2,802 138 132 90,530 1,890
May-01 3,014 2,981 196 2,633 5,707,832 38,616 3,106 3,062 145 140 105,370 2,270
Jun-01 3,183 3,154 202 2,639 5,398,317 39,948 3,299 3,279 144 148 105,720 2,290
Jul-01 3,350 3,318 203 2,651 5,148,455 41,942 3,391 3,376 142 149 125,170 2,650
Aug-01 3,446 3,425 204 2,652 5,103,420 42,840 3,463 3,461 141 151 110,410 2,830
Sep-01 3,561 3,506 204 2,652 4,456,000 44,035 3,556 3,546 140 151 124,570 2,990

SEBI BULLETIN
■
Oct-01 3,651 3,602 205 2,653 4,748,980 44,934 3,758 3,751 142 157 107,520 3,470
Nov-01 3,746 3,692 207 2,655 5,288,882 45,635 3,824 3,821 141 163 126,130 3,700

VOL. 1
Dec-01 3,847 3,760 209 1,655 5,233,400 47,027 4,056 4,038 143 168 127,360 3,720

■
Jan-02 4,012 3,954 210 1,648 5,363,152 48,340 4,177 4,168 146 177 119,870 3,990
Feb-02 4,120 4,088 212 1,648 5,882,299 49,688 4,224 4,222 146 176 213,880 4,540

PART 3
Mar-02 4,210 4,172 212 1,648 6,150,006 51,673 4,293 4,284 148 181 243,370 4,820

■
2001-02 4,210 4,172 212 1,648 6,150,006 51,673 4,293 4,284 148 181 243,370 4,820
Apr-02 4,294 4,252 213 1,649 6,276,870 54,544 4,361 4,356 149 180 285,940 5,450
May-02 4,355 4,324 212 1,649 6,049,770 56,768 4,397 4,393 151 187 313,640 5,260
Jun-02 4,405 4,369 212 1,650 6,429,628 58,279 4,428 4,428 152 187 302,540 5,660

MARCH 2003
Jul-02 4,482 4,437 213 1,650 5,917,323 60,614 4,463 4,455 159 192 291,070 5,850

■
Aug-02 4,533 4,500 213 1,718 6,122,881 61,687 4,481 4,479 160 197 309,920 6,240

103
Sep-02 4,579 4,547 213 1,718 5,725,208 63,553 4,499 4,494 166 198 298,270 6,300
Oct-02 4,631 4,598 213 1,718 5,679,546 64,702 4,540 4,537 169 202 291,050 6,790
Nov-02 4,665 4,631 213 1,718 6,054,445 61,457 4,552 4,549 170 202 300,950 7,020
Dec-02 4,690 4,664 212 1,717 6,298,920 62,939 4,562 4,562 170 206 339,220 7,280
Jan-03 4,714 4,691 213 1,718 6,335,905 64,244 4,584 4,584 174 207 352,350 7,810
Feb-03 4,744 4,705 213 1,718 6,484,082 67,613 4,604 4,604 175 208 375,250 8,040
Mar-03 4,803 4,761 213 1,718 6,005,389 68,757 4,628 4,628 177 212 361,640 8,210
2002-03 4,803 4,761 213 1,718 6,005,389 68,757 4,628 4,628 177 212 361,640 8,210

Source : NSDL and CDSL.

*Market capitalisation of companies that have joined NSDL (inclusive of both physical and dematerialised shares).
99

# Market capitalisation of securities in CDSL.

 100 SECURITIES AND EXCHANGE BOARD OF INDIA

Table 37 : Receipt and Redressal of Investor Grievances

Year Grievances Received Grievances Redressed Cumulative

During the year Cumulative During the year Cumulative Redressal Rate (%)

1991-92 18,794 18,794 4,061 4,061 21.61

1992-93 1,10,317 1,29,111 22,946 27,007 20.92
1993-94 5,84,662 7,13,773 3,39,517 3,66,524 51.35
1994-95 5,16,080 12,29,853 3,51,842 7,18,366 58.41
1995-96 3,76,478 16,06,331 3,15,652 10,34,018 64.37
1996-97 2,17,394 18,23,725 4,31,865 14,65,883 80.38
1997-98 5,11,507 23,35,232 6,76,555 21,42,438 91.74
1998-99 99,132 24,34,364 1,27,227 22,69,665 93.24
1999-2000 98,605 25,32,969 1,46,553 24,16,218 95.39
2000-01 96,913 26,29,882 85,583 25,01,801 95.13
2001-02 81,600 27,11,482 70,328 25,72,129 94.86
2002-03 37,434 27,48,916 38,972 26,11,101 94.99

SEBI BULLETIN ■ VOL. 1 ■ PART 3 ■ MARCH 2003 ■ 104

 Table 38 : Assets under the Custody of Custodians
(Amount in Rs. mn.)

Client FIIs/Sas FI Mutual Funds NRIs OCBs Brokers Corporates Banks Foreign Others Total
Depositories
At the
end of No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount

Apr-01 1,309 514,415 24 1,334,729 240 225,845 1,711 1,756 174 19,303 5 940 463 94,295 10 42,150 9 156,042 27,856 105,140 31,801 2,494,614

May-01 1,321 544,644 26 1,297,054 242 255,354 1,724 1,883 148 22,933 5 640 467 94,283 10 42,985 9 167,031 27,749 133,177 31,701 2,559,982
STATISTICAL TABLES

Jun-01 1,344 539,881 25 1,245,428 242 268,473 1,738 1,898 170 19,101 6 1,139 472 105,193 10 71,148 9 155,577 27,625 117,039 31,641 2,524,876

Jul-01 1,339 517,251 25 1,074,447 328 269,305 1,735 1,832 174 16,085 6 1,086 485 101,116 10 43,793 9 152,080 27,579 124,879 31,690 2,301,874

Aug-01 1,342 515,060 25 1,045,568 344 291,402 1,741 1,672 171 15,688 6 1,152 483 108,563 11 154,836 9 147,836 27,464 123,194 31,596 2,404,970

Sep-01 1,320 427,270 24 979,734 347 291,029 1,744 1,476 163 14,978 5 720 492 113,166 11 61,821 31 151,516 27,384 84,019 31,521 2,125,729

Oct-01 1,326 475,113 24 1,020,807 375 307,107 1,760 1,462 164 11,846 4 1,465 495 113,004 11 64,821 31 164,545 27,317 101,590 31,507 2,261,758

Nov-01 1,355 536,351 24 1,063,261 383 306,104 1,768 1,758 164 13,885 4 1,393 500 111,913 11 73,576 31 171,856 27,287 159,120 31,527 2,439,216

Dec-01 1,332 542,136 22 1,037,037 422 312,254 1,766 1,801 181 13,543 5 70 529 109,735 13 89,722 31 160,024 27,177 104,477 31,478 2,370,798

Jan-02 1,375 560,136 25 1,067,862 435 333,879 1,788 1,903 181 14,289 4 0 539 124,444 13 116,223 31 163,863 26,967 116,072 31,358 2,498,671

Feb-02 1,372 611,562 25 1,120,579 447 357,341 1,796 1,733 183 13,046 4 0 560 128,401 14 151,833 32 173,173 26,947 128,956 31,380 2,686,625

SEBI BULLETIN
■
Mar-02 1,354 617,528 26 1,108,243 458 325,705 1,820 1,848 178 12,851 4 0 565 133,111 14 177,983 32 172,971 26,780 152,430 31,231 2,702,667

2001-02 1,354 617,528 26 1,108,243 458 325,705 1,820 1,848 178 12,851 4 0 565 133,111 14 177,983 32 172,971 26,780 152,430 31,231 2,702,667

VOL. 1
Apr-02 1,358 590,579 26 1,110,479 464 314,421 1,832 1,911 175 13,103 4 850 563 136,182 14 176,542 32 166,952 26,723 148,443 31,191 2,659,462

■
May-02 1,320 552,905 26 1,094,152 469 348,481 1,837 2,740 171 12,340 4 608 559 138,520 14 179,300 33 160,271 26,742 156,736 31,175 2,646,052

Jun-02 1,314 561,685 31 1,104,173 432 380,008 1,838 2,793 168 12,749 4 490 524 143,429 15 193,160 33 161,485 27,101 156,160 31,460 2,716,133

PART 3
■
Jul-02 1,308 517,612 29 1,113,261 446 397,803 1,843 2,555 168 11,121 4 650 529 147,721 15 196,099 33 147,280 29,689 150,453 34,064 2,684,556

Aug-02 1,307 546,088 29 1,125,646 449 426,894 1,861 2,730 168 10,585 4 150 532 149,738 15 210,997 33 157,728 27,928 156,485 32,326 2,787,040

Sep-02 1,301 523,864 31 1,096,407 451 428,588 1,880 2,641 169 9,368 4 850 540 150,176 13 207,469 33 150,230 28,152 158,887 32,574 2,728,480

Oct-02 1,307 511,141 31 1,083,169 432 459,806 1,901 2,637 167 9,325 4 450 542 144,880 13 206,604 33 145,229 28,302 157,409 32,732 2,720,649

MARCH 2003
Nov-02 1,310 574,454 32 1,129,162 440 487,368 1,909 3,101 165 10,033 4 1,305 548 146,704 13 210,930 33 160,489 28,271 164,977 32,725 2,888,522

■
Dec-02 1,309 593,237 34 1,168,716 454 490,038 1,916 3,202 156 10,038 4 2,806 553 154,734 13 214,775 33 171,856 28,242 162,632 32,714 2,972,034

105
Jan-03 1,304 590,696 33 1,152,741 463 504,426 1,922 2,950 156 8,869 4 816 559 141,088 13 217,519 33 168,715 28,261 173,432 32,748 2,961,250

Feb-03 1,291 599,091 34 813,061 465 419,289 1,936 2,842 155 9,177 3 0 576 151,714 12 216,677 35 168,889 28,304 164,659 32,811 2,545,399

Mar-03 1,313 561,394 33 1,131,545 496 413,683 1,930 2,627 141 11,357 3 0 540 134,979 12 208,137 33 158,897 28,051 165,925 32,552 2,788,545

2002-03 1,313 561,394 33 1,131,545 496 413,683 1,930 2,627 141 11,357 3 0 540 134,979 12 208,137 33 158,897 28,051 165,925 32,552 2,788,545

Source : Various Custodians

101
 Table 39 : Ratings Assigned for Corporate Debt Securities (maturity > 1 year)
(Amount in Rs. mn.)
102
Grade Investment Grade Non-Investment Grade Total
Highest Safety (AAA) High Safety (AA) Adequate Safety (A) Moderate Safety (BBB)
Period Number Amount Number Amount Number Amount Number Amount Number Amount Number Amount
1999-00 77 977,225 57 111,055 55 72,268 17 8,958 14 7,231 220 1,176,737
2000-01 113 979,879 99 128,801 63 148,898 9 16,885 11 4,045 295 1,278,508
Apr-01 2 40,130 7 12,970 3 1,450 1 100 1 350 14 55,000
May-01 5 10,852 5 8,820 3 930 0 0 0 0 13 20,602
Jun-01 9 83,218 9 35,650 6 11,450 1 150 0 0 25 130,468
Jul-01 9 46,027 13 42,647 8 20,700 4 990 4 450 38 110,814
Aug-01 16 391,532 23 150,470 7 26,350 4 1,490 1 150 51 569,992
Sep-01 15 46,355 12 96,780 8 9,270 7 1,000 0 0 42 153,405
Oct-01 5 13,792 7 5,426 11 8,310 3 1,125 0 0 26 28,653

SEBI BULLETIN
■
Nov-01 12 90,749 5 9,720 8 9,930 3 10,240 0 0 28 120,639
Dec-01 12 70,434 8 5,850 6 19,425 0 0 1 100 27 95,809

VOL. 1
Jan-02 10 50,708 11 6,835 9 15,040 1 50 0 0 31 72,633

■
Feb-02 3 11,642 7 11,950 3 410 0 0 0 0 13 24,002
Mar-02 8 14,428 5 6,000 8 7,590 2 100 3 1,865 26 29,983

PART 3
■
2001-02 106 869,867 112 393,118 80 130,855 26 15,245 10 2,915 334 1,412,000
Apr-02 6 57,430 3 6,800 3 900 1 44 1 70 14 65,244
May-02 15 78,362 6 35,680 4 7,250 1 230 0 0 26 121,522
Jun-02 20 113,540 6 7,050 1 30 1 134 1 200 29 120,954

MARCH 2003
■
Jul-02 16 95,745 9 18,850 7 7,466 4 2,750 0 0 36 124,811
Aug-02 14 103,324 12 13,137 13 18,150 2 3,240 1 420 42 138,271

106
Sep-02 12 83,854 9 7,260 12 15,250 3 590 0 0 36 106,954
Oct-02 7 9,718 9 6,420 1 1,000 2 405 1 100 20 17,643
Nov-02 15 44,114 9 4,040 5 36,200 1 3,000 1 1,000 31 88,354
Dec-02 18 41,659 7 15,650 5 9,920 1 2,000 0 0 31 69,229
Jan-03 10 342,350 9 34,100 4 3,200 1 200 1 1,000 25 380,850
Feb-03 19 77,494 7 31,692 1 300 3 9,486 4 11,836 34 130,808
Mar-03 8 30490 9 14447 8 6852 2 1270 0 0 27 53059
2002-03 160 1,078,080 95 195,126 64 106,518 22 23,349 10 14,626 351 1,417,698

Source : Various Credit Rating Agencies

SECURITIES AND EXCHANGE BOARD OF INDIA
 Table 40 : Review of Accepted Ratings of Corporate Debt Securities (maturity > 1 year)
(Amount in Rs. mn.)

Grade Upgraded Downgraded Reaffirmed Rating Watch Withdrawn Total

Period Number Amount Number Amount Number Amount Number Amount Number Amount Number Amount
1999-00 1 262 2 640 6 1,433 0 0 2 330 11 2,665
2000-01 6 1,551 4 732 26 33,017 0 0 6 1,325 42 36,625
STATISTICAL TABLES

Apr-01 8 4,251 14 4,095 33 20,916 0 0 3 952 58 30,214

May-01 13 3,166 46 148,786 80 412,745 1 50 10 2,243 150 566,990
Jun-01 12 26,562 94 91,960 91 413,415 1 50 26 3,858 224 535,845
Jul-01 12 144,003 104 84,276 137 1,327,647 5 2,067 27 3,599 285 1,561,592
Aug-01 33 56,220 142 217,220 216 1,603,446 34 62,183 49 10,393 474 1,949,462
Sep-01 56 107,056 123 261,357 278 2,678,079 27 81,218 115 48,818 599 3,176,527
Oct-01 0 0 6 1,982 22 53,449 2 236 5 1,368 35 57,035
Nov-01 0 0 11 7,710 11 60,642 0 0 8 943 30 69,295

SEBI BULLETIN
■
Dec-01 4 14,530 7 1,067 21 89,630 1 165 7 2,024 40 107,417
Jan-02 2 1,060 7 24,132 48 188,220 14 116,540 7 7,441 78 337,393

VOL. 1
■
Feb-02 1 268 15 385,060 54 1,666,012 3 1,800 8 3,468 81 2,056,608
Mar-02 0 0 22 127,811 32 105,882 2 3,569 7 3,693 63 240,955

PART 3
2001-02 141 357,115 591 1,355,456 1,023 8,620,083 90 267,878 272 88,800 2,117 10,689,332

■
Apr-02 1 250 26 33,304 21 108,922 1 0 12 4,252 61 146,728
May-02 0 19 201,761 36 209,732 0 0 6 9,150 61 420,643
Jun-02 3 1,050 21 473,048 55 130,780 4 3,039 9 3,447 92 611,364

MARCH 2003
Jul-02 1 200 23 52,680 40 219,182 3 607 8 1,599 75 274,267

■
Aug-02 1 500 17 24,585 32 414,706 3 5,805 10 3,549 63 449,145

107
Sep-02 1 1,000 8 2,678 35 373,163 6 125,099 13 6,972 63 508,912
Oct-02 1 50 15 118,701 21 95,210 8 61,140 12 3,504 57 278,605
Nov-02 3 1,373 8 57,830 24 141,992 3 19,950 18 33,495 56 254,640
Dec-02 6 7,500 7 29,691 28 310,089 2 1,550 10 64,786 53 413,616
Jan-03 2 1,500 34 316,514 37 312,706 13 44,825 8 3,387 94 678,931
Feb-03 3 700 12 9,269 51 319,325 2 3,700 14 133,137 82 466,130
Mar-03 4 2,331 11 34,165 30 160,389 0 0 7 1,730 52 198,615
2002-03 26 16,453 201 1,354,226 410 2,796,194 45 265,715 127 269,009 809 4,701,597

Source : Various Credit Rating Agencies

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