Day: February 26, 2025

India has witnessed a notable 69 per cent increase in headcount in the institutional investor sector over the last two years, said a report by CIEL HR Services. 

The report, titled Institutional Investors – Talent Trends and Insights, highlights that India’s market capitalisation has risen over the past decade, growing from $1.2 trillion to $5.2 trillion, spurred by significant expansion in the institutional investor sector. 

The sector has made strides in workforce diversity, with women’s participation at 27 per cent of the overall workforce. However, representation in leadership roles remains a challenge, with women holding just 14 per cent of senior positions.

One notable finding regarding talent mobility revealed that only 17 per cent of professionals, including fund managers, portfolio managers, and senior analysts, are promoted from within their organisations, while 83 per cent are hired externally. This presents an opportunity for companies in the sector to innovate their practices around internal career progression and enhance their work environment to help talent thrive. 

“India’s trajectory towards becoming a $7 trillion economy by 2030 is a reflection of its burgeoning market size and a testament to the rapid transformation taking place across its financial landscape. With an expected growth rate of 6.1 per cent over the next five years and positioning to become the world’s third-largest economy by 2027, India’s institutional investor sector is at the forefront of this evolution,” said K Pandiarajan, executive director and chairman, CIEL HR.

“The sector is experiencing a radical shift, with both established players and new entrants driving innovation in investment strategies and financial products. This dynamic growth signals a pivotal moment for institutional investors to harness emerging opportunities, both within India and globally,” he added. 

The study encompasses over 16,000 executives from 80 companies in the investor sector and provides valuable insights into key areas such as gender diversity, tenure in firms, roles in demand, and career progression. 

“The sector employs crème de la crème talent in the country. With our economy growing at a rapid pace, the demand for these roles will surge, further widening the demand-supply gap. We anticipate skilled professionals to return to India from global markets while also drawing expatriates to the country,” said Aditya Narayan Mishra, managing director and chief executive officer, CIEL HR.

Approximately 25 per cent of the workforce in the institutional investor sector has switched jobs in the past year, emphasising the dynamic and competitive nature of the industry. The average tenure across the institutional investor sector is three years, reflecting high mobility and competition for talent. 

Professionals in the industry often hold advanced qualifications, including MBAs from top Indian and international business schools, as well as prestigious CA and CFA certifications.

Eqwires Research Analyst

Top-notch SEBI registered research analyst

Best SEBI registered Intraday tips provider

info@eqwires.com

Telegram | Facebook | Instagram

Call: +91 9624421555 / +91 9624461555

www.eqwires.com

The Securities and Exchange Board of India (Sebi) has proposed a raft of new measures aimed at reducing risks and the potential for manipulation in the equity derivatives market while ensuring a stronger alignment with the cash market. Key proposals include a new methodology for calculating open interest (OI) using a ‘delta’ framework, a review of marketwide position limits (MWPL), and the introduction of position limits for single stocks and index derivatives. 

The new proposal comes close on the heels of six measures introduced by Sebi to curb frenzy in index derivatives. 

These measures — a majority of which have already been implemented — have nearly halved trading volumes.

The fresh proposals may not materially affect traders but could help reduce the frequency of stocks entering the ban period, thereby simplifying their trading experience. The changes also aim to enhance market integrity and ensure a more accurate reflection of market conditions. 

The market watchdog has proposed a new metric called ‘future equivalent’ or a delta-based framework for calculating open interest in futures and options (F&O).

Delta refers to the change in an option’s price when the price of the underlying security changes in the cash market. 

At present, open interest (OI) is measured by adding notional OI in futures and options. OI is key to gauging trader activity and sentiment.

“A more meaningful approach would be to aggregate the delta or future equivalent of options positions with futures OI, thereby reflecting the true price sensitivity of outstanding positions,” observes the consultation paper. 

Sebi also plans to link MWPL to the underlying cash market. 

MWPL refers to the maximum number of open F&O contracts allowed for a single stock. 

Once a scrip exceeds MWPL, further trading in its derivatives is restricted. The regulator has proposed a mechanism to offset trades instead of merely squaring off positions when a stock enters the ban period. The move is intended to help traders reduce their risks.

For instance, if a trader holds a long futures position, they could buy put options or sell call options to reduce total delta exposure. 

Currently, MWPL for each stock is 20 per cent of the stock’s free-float market capitalisation (mcap) and is applied to the total notional OI of F&O. 

Sebi has proposed reducing it to 15 per cent of free-float mcap or 60x the average daily delivery value (ADDV) in the cash market, whichever is lower. This metric will be recalculated every three months based on rolling ADDV. 

The new methodology is expected to reduce instances of stocks moving into the ban period by 90 per cent.

The regulator may also explore the need for an MWPL for index derivatives in the future. 

The new methodology will also be incorporated when considering exposure limits for mutual funds (MFs) and alternative investment funds in derivatives to ensure that it accounts for leverage in long options. Further, Sebi is considering imposing individual entity-level position limits for single scrips so that no single entity, such as a foreign portfolio investor (FPI), stockbroker, or MF, can unduly influence the market. 

Sebi has proposed increasing the end-of-day limit for index futures from ₹500 crore to ₹1,500 crore, considering the rise in market size and trading volumes since March 2020. The intraday limit for the same has been proposed at ₹2,500 crore to facilitate market-making.

Similar revisions have been proposed for index options as well. 

Another key proposal is introducing pre-open and post-closing sessions for derivatives, similar to those in the cash market, to enhance price discovery. 

“This is especially useful, as today there are fewer than 40 stock options with complete liquidity and fewer than 25 that can be traded at a scale of a few hundred crores. These reforms put in place a basis for a more efficient, open derivatives market, but they will succeed only if investors and traders learn to adapt to the new regime,” said Rahul Ghose, chief executive officer of Hedged.in.

Further, Sebi has proposed additional conditions to allow derivatives for sectoral and thematic indices. Such an index must have at least 14 constituents, with the weight of the top constituent not exceeding 20 per cent and the combined weight of the top three not exceeding 45 per cent. 

The clarity will help exchanges offer derivatives on more indices.

Eqwires Research Analyst

Top-notch SEBI registered research analyst

Best SEBI registered Intraday tips provider

info@eqwires.com

Telegram | Facebook | Instagram

Call: +91 9624421555 / +91 9624461555

www.eqwires.com

Kotak Institutional Equities is of the view that the markets are likely to remain range bound this year, as they continue to trade above historical averages and at a significant premium to the MSCI Emerging Markets (EM) index. 

Pratik Gupta, chief executive officer (CEO) and co-head of institutional equity at Kotak Securities, noted that the Nifty is currently trading at a price-to-earnings (PE) multiple of 19 times based on March 2026 earnings estimates. 

This valuation appears elevated, considering earnings are expected to compound at 14 per cent in FY26 and FY27, with potential downside risks to these estimates.

“Given this, we do not foresee a meaningful upside for the Nifty in the short term,” said Gupta, who shared insights from Kotak’s recent investor conference. 

However, the downside for the Nifty is cushioned by India’s robust medium-term growth prospects, which are expected to sustain elevated valuations.

Additionally, a more favourable foreign and domestic liquidity environment in the second half of 2026 could provide further support. 

Kotak Institutional Equities remains cautious about the outlook for small and midcap stocks, as their valuations have not moderated significantly despite recent market corrections. 

The brokerage highlighted key downside risks for the broader market, including a sharper-than-expected global slowdown, a deficient monsoon, or a sharp decline in retail inflows into domestic equities — particularly small and midcap funds. 

On the upside, potential catalysts include a weaker US dollar, which could drive flows into EM funds, and a faster-than-expected private capital expenditure (capex) upcycle. 

Based on feedback from foreign portfolio investors (FPIs), Gupta said Indian equity markets appear somewhat expensive. 

Nevertheless, from a three-to-five year perspective, most foreign investors remain optimistic about India’s medium-term growth outlook. 

FPIs are looking to increase their exposure to Indian stocks once valuations become more attractive. 

However, many EM funds are currently facing redemptions. 

“Capital is flowing back to the US, partly due to a strong dollar and Trump’s policies. Even if India is attractive, FPIs currently lack the funds to invest, as money is being redirected to the US,” Gupta said.

He also pointed out that the capital gains tax has further dampened the appeal of Indian equities for FPIs. 

“Over the past two years, most FPIs achieved around 20 per cent returns in rupee terms, with the rupee remaining relatively stable. After accounting for a 10 per cent long-term capital gains tax (for holdings over a year), returns were still attractive compared to US bond yields.  

However, with bond yields rising, return expectations from India declining, the rupee depreciating by 3-4 per cent, and higher capital gains taxes, FPIs are now left with 6.5-7.5 per cent dollar returns after deductions, taxes, surcharges, and fund manager fees. This is relatively low for an emerging market like India,” Gupta added.

On the domestic front, Gupta noted that while equity inflows into local mutual funds, insurance, and portfolio management services (PMS) have slowed, overall net inflows remain positive. 

“However, the nature of these flows has shifted. Previously, investments were directed towards small and midcap or thematic funds. But now, they are increasingly favouring largecap or balanced debt-equity funds,” he said. 

In terms of sectoral preferences, Kotak Institutional Equities continues to favour large private banks, non-banking financial companies (NBFCs), life insurance firms, residential real estate, hotels, and the airlines/hospitality sectors. 

Conversely, the brokerage remains cautious on consumer staples, discretionary stocks, and the oil & gas and chemicals sectors.

Eqwires Research Analyst

Top-notch SEBI registered research analyst

Best SEBI registered Intraday tips provider

info@eqwires.com

Telegram | Facebook | Instagram

Call: +91 9624421555 / +91 9624461555

www.eqwires.com