Euro Issues & Indian Primary Securities Markets: An Empirical Study

Abstract

Before liberalization of the Indian economy, resource e mobilization from the primary market was low but in the early nineties it gradually increased as many big projects were launched. Many reforms were taken place in the primary market after establishment of SEBI in 1992. After that Indian firms are allowed to raise capital from international markets from 1992 in the form of ADR, GDR AND ECBs. At the same time it has an impact on domestic issues also. The main objective of this paper is to examine the explanatory power and the impact of EURO ISSUES on primary securities market activities in India during the post- reform period. Annual data from 1992-93 to 2013-14 have been used in case of variables EURO Issues and resource mobilized form the domestic primary market, through the issue of IPO, FPO, CCPs and debts. For the purpose of the analysis of the date correlation coefficient and regression equation is estimated through ordinary least square methods. Analysis revealed that internationalization of Indian capital market enables Indian firms to raise capital from abroad. It has been found that there is a positive impact of EURO issues on the development of domestic market. The value of R² (0.403) and adjusted R² (0.373) are significantly different from zero and the parameter of explanatory variable is significant at 1% level. It shows that more than 37% variation in the dependent variable is explained by EURO issues.