The unprecedented inflows to equity-oriented schemes helped mutual fund houses grow their Assets Under Management (AUM) impressively in 2016. Rising AUM and greater participation indicate that investing in mutual fund schemes gained popularity. Participation of investors in the Initial Public Offers (IPOs) rose as well. About 26 companies managed to raise Rs 26,000 crore from the market in 2016.

The pleasant aspect of this growth story has been the maturity of investors revealed by the fact that, more money has flown into mutual funds by way of Systematic Investment Plans (SIPs). 

Higher investors' participation in IPOs and mutual fund schemes suggests that they have been upbeat on the market at a time when the going got tougher. While this indicates the maturity of investors to withstand tough times, it also raises doubts about receiving adequate information about the market.

This brings us back to the fundamental question of why Indian markets have been struggling so long to attract a large number of investors. Less than 5% of Indian population invests in capital markets currently. The Securities and Exchange Board of India (SEBI), being aware of this, took many steps to protect investors' interest and educate them appropriately. They are as follows:

• The capital market regulator shortened the IPO listing time to half from T+12 days to T+6 days. The regulator made it compulsory for companies raising capital through primary markets to use ASBA (Applications Supported by Blocked Amount) facility.
• It asked top 500 listed companies by market cap to chalk out and announce the dividend policies, which, the regulator thinks will help investors make well-informed decisions.
• SEBI simplified the demat account opening procedure
• Intermediaries play a vital role in ensuring the smooth functioning of the market, the SEBI allowed a permanent registration facility to various categories of intermediaries that included investment advisors, research analysts, merchant bankers, depository participants and 7 others.
• Portfolio Manager regulations were also rationalised.
• SEBI tightened the delisting norms to protect minority shareholders.
• In another move, the regulations for angel investors were also relaxed with the aim of supporting start-ups.
• It also prohibited wilful defaulters from raising capital through public offers and assuming positions of contro in listed companies. This move potentially would work in favour of investors by safeguarding them against getting tricked into offers floated by wilful defaulters. This will also encourage good governance practices.
• SEBI also loosened up norms for Real Estate and Infrastructure Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) to increase their acceptance in the market.
• The PM recently inaugurated the new campus of National Institute of Securities Markets (NISM), a public trust established by the SEBI, at Patalganga near Mumbai. The capital market has spent over Rs 400 crore on setting up this facility. The addition of such a large scale infrastructure would help in meeting the high market demands for qualified market professionals.

What to expect?

In the year 2017, the SEBI is expected to continue working on its 2016 initiatives; investor protection and financial literacy among citizens, would be high on the priority list. Start-ups listings would remain in focus while it's crucial to see how bond markets deepen further and REITs manage to gain popularity.

However, it's noteworthy that, in February 2016, SEBI chief Mr U.K. Sinha was granted an extension for 1 year, endding in February 2017. It remains a mystery to see who replaces him. Now the expectation is his successor would lead the capital markets on the same path founded by him and his predecessor Mr C.B. Bhave. Under the tenure of both SEBI chiefs the investor protection and education has taken the centre stage.

PersonalFN believes that to develop capital markets, there is no substitute to educating investors wisely. PersonalFN has taken various initiatives on a number of platforms to educate investors.

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