India’s equity market is geared up to aid the country achieve the $5 trillion economy mark, Securities and Exchange Board of India (SEBI) Chairman Ajay Tyagi said.

Speaking at the Ficci’s 17th Annual Capital Market Conference ‘CAPAM2020’, Tyagi said the equity market systems are well geared up to take on the current challenges. The theme of the conference is ‘Atmanirbhar Bharat: Role of Capital Market’.

He acknowledged that the country is passing through a difficult, stressful and challenging time due to the Covid-19 outbreak.

Besides, Tyagi called for the development of the country’s corporate bond market. Terming the segment as critical, he pointed that some initiatives in this regard have been taken, however, more reforms are required.

Despite Covid-19 pandemic, there has been a surge in participation of retail investors in the equity market over the last few months, SEBI Chairman Ajay Tyagi said.

Addressing the Ficci’s 17th Annual ‘CAPAM2020’, he said: “The fact that there is also a surge in opening up of demat accounts suggests that many of these retail investors are perhaps first-time investors in the stock market.”

Meanwhile the Covid-19 has significantly impacted Indian consumers as 78 per cent of the Indian consumers said they have reduced discretionary spending, a new KPMG report revealed on Wednesday.

However, 51 per cent of respondents feel that the impact of Covid-19 will be short-lived and normalcy is not far, said the report.

Consumers in tier-2 and tier-3 cities are much more optimistic than those in tier-1 cities, the findings showed.

Our study indicates that 22 per cent consumers in tier-2 and 30 per cent consumers in tier-3 feel that their spending will either increase or remain the same as prior to COVID-19 and this could be the next focus area for retailers to expand their presence,” said Harsha Razdan, Partner and Head, Consumer Markets and Internet Business, KPMG in India.

“In the next three months, 49 per cent respondents intend to spend up to Rs 5,000, across categories which makes this the most popular basket value and indicates that consumers are cautious about spending,” Razdan added. A comparative of pre and post Covid-19 scenario clearly showed that preference to online channels have increased 1.6 times.

The results suggest the emergence of a new consumer who is financially constrained, more advanced in their use of digital technologies, more thoughtful and selective in their decision-making, and keen to see Covid-19 as an opportunity to reset values.

The survey was conducted with 2,376 respondents across tier-1, tier-2 and tier-3 cities, amongst different spender types and age groups, between May 18-June 7.

“Consumer goods companies and retailers will need to identify ways to continue to build consumer trust and confidence going forward. As a consequence, companies will need to develop their online presence and last-mile logistics and delivery capabilities and manage supply chain hygiene across all levels,” Razdan said.

“With the advent of a strong digital wave, it will be important for companies to adapt to the situation quickly and continue to innovate keeping consumers at the centre of their plans.”

On the theme of ‘Aatmanirbhar Bharat: Role of Capital Market’, Tyagi said: “With a view to facilitating a smooth and welcome entry of these newcomers to the capital markets, it would be ideal that they begin their journey by first investing in risk free G-Secs.”

“The issuance of G-Secs in demat form, apart from easing the process of making investments by non-institutional participants in these securities, may also facilitate easier raising of borrowings.”

On improving the corporate bond and G-Secs market, he said that there is an inter-linkage between them.

“The required reforms in the corporate bond market should be brought in without any further loss of time,” he said.

“Unification of financial markets is an idea whose time has come.” Besides, Tyagi said that the market infrastructure for corporate bond and G-Secs markets should be integrated.

He contended that having two separate ecosystems results in artificial segmentation of investors and divergent governance and regulatory norms for institutions in the two markets performing similar functions.

Highlighting the potential of the Indian financial market, Tyagi said that it is geared up to aid the country achieve the $5 trillion economy mark.

Indo-Asian News Service