Finance Minister Nirmala Sitharaman’s Budget has increased minimum public shareholding in listed companies.
Vinay Umarji | Ahmedabad Last Updated at July 11, 2019 18:15 IST
Indian markets are catching up with global peers in terms of the amount of corporate shares available for the public, said Koel Ghosh, head of South Asia, S&P Dow Jones Indices, on Thursday.
“Globally, we were the last one to convert into free (or public) float. We were full float kind of thing. We have just come up to speed what the global norms are,” she said.
Last week, Finance Minister Nirmala Sitharaman’s Budget increased minimum public shareholding in listed companies from 25 per cent to 35 per cent. The proposal is being examined by market regulator Securities and Exchange Board of India (Sebi).
The average free-float for top 50 Indian companies is slightly over 50 per cent much lower than developed markets like US and Germany, which have more than 85 per cent free float.
“Globally free float is not constrained. If you constrain free float, we believe it is not representative of the market,” said Ghosh.
On the proposal to cap sector weight in benchmark indices, Ghosh said that should be a call taken by the product provider depending on the various factors.
“An index should represent the market. If the product provider is of the view that one particular sector has over-exposure or has a risk element, then the weight should be capped. It has to be the product provider’s call,” she said.
In May, stock exchanges had floated a discussion paper proposing to cap sectoral weightage in the benchmark index. The move had come after certain participants had expressed concerns over growing weight of the financial sector in the benchmark Sensex and Nifty indices.