Fund raising through public issues, private placements and Euro issues will remain upbeat, the pre-Budget Economic Survey said.
It noted that "recent policy initiatives to address systematic issues related to primary capital market may increase reliance on public issues as a major source of funds for Indian corporates, besides helping to broaden the investor base".
With expectations of pick-up in investment activities continuing in 2007-08, resource mobilisation through public issue, private placement and euro issues are slated to remain encouraging in the primary market segment, the Survey said.
The Survey added that the investors' growing preference toward mutual fund route would further enhance institutional investment in equity markets, which along with regulatory support could counter-balance and cushion the impact of swings in the stock prices.
The upbeat investor sentiment helped mobilise over Rs 2,66,700 crore (Rs 2667 billion) in the Indian capital market through the primary market and mutual fund routes in 2006, it added.
After registering a growth of 30.5 per cent in aggregate mobilisation, especially through private placements and initial public offerings, the primary capital market has remained upbeat in the current fiscal so far, the Survey said.
Out of Rs 1,61,769 crore (Rs 1617.69 billion) raised in the primary capital market, private placements accounted for Rs 1,17,407 crore (Rs 1174.07 billion) or 72 per cent, while 75 IPOs garnered Rs 24,779 crore (Rs 247.79 billion), it added.
The number of IPOs also showed a steady rise to 75 in 2006 with an average of six IPOs a month, as compared to 55 in the previous year.
There was a sharp rise in resource mobilisation by mutual funds too, with their net resources growing over four-fold from Rs 25,454 crore (Rs 254.54 billion) in 2005 to Rs 1,04,950 crore (Rs 1049.50 billion) in 2006.
The robust growth in mobilisation by mutual funds was driven by buoyant inflows under both income or debt oriented schemes and growth or equity focused schemes.
The negative inflows in 2003 and 2004 also turned positive for the public sector mutual funds in 2005 and accelerated further in 2006.
Share of UTI and other public sector mutual funds in the total amount mobilised was around 22.5 per cent in 2005 and 17.8 per cent in 2006, the Survey said.
"In tandem with an increase in resource mobilisation, asset under management of mutual funds increased by about Rs 1,24,000 crore (Rs 1240 billion) to reach 3,24,000 crore (Rs 3240 billion) in 2006."
After registering net sales of Rs 1,164 crore (Rs 11.64 billion) in 2004, mutual funds made net purchase of Rs 13,436 crore (Rs 134.36 billion) in 2005, which further rose to Rs 15,384 crore (Rs 153.84 bilion) in 2006.Economic Survey 2006-07: Complete Coverage
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