Indian central bank governor Shaktikanta Das emphasized the necessity for Indian banks to play a larger role in global derivatives markets and ensure fair access for smaller retail participants. Speaking at a fixed income conference in Barcelona, Das highlighted the limited participation of domestic banks in derivatives markets and urged them to become prominent market makers globally.
He stressed the importance of widening the involvement of Indian players in rupee derivatives markets while maintaining prudence. Das also addressed issues such as the pricing gap between retail and large customers in foreign exchange markets and the misuse of banking channels for unauthorized FX trading platforms, urging lenders to enhance vigilance. Additionally, he encouraged bank treasuries to capitalize on opportunities arising from recent regulatory reforms for effective market intermediation and financial risk management, emphasizing the need for active treasury management.
Das also mentioned the RBI’s efforts to expand the scope of financial markets through technological platforms like the Retail Direct platform for investment in government securities and FX Retail
Domestic mutual funds are gaining prominence in the equity market, with their share in equity assets under management (AUM) reaching a record 20.1% in March 2024, reducing the gap between domestic and foreign institutional investors to under 1 percentage point. Over the past five years, local funds have seen significant growth, with their share rising by more than 500 basis points, supported by substantial investments.
This shift has lessened the pressure of potential sharp redemptions by foreign portfolio investors (FPIs). Mutual funds, comprising 20.1% of domestic institutional investors, lead the pack, followed by insurance companies, banks, local pension funds, and financial institutions. The total equity portfolio value of domestic funds surged by 53% year-on-year to a record ₹34.7 lakh crore in March 2024, outpacing the growth in total institutional equity AUM by over 12%.
Gold prices continued their record-breaking streak on April 8, reaching new highs driven by central bank acquisitions and geopolitical tensions, despite positive economic indicators. Spot gold peaked at $2,353.79 before settling slightly lower at $2,336.39, while US gold futures closed at $2,351. In India, gold surged to Rs 71,080 per 10 grams, and silver rose to Rs 82,109 per kg. Central bank purchases, geopolitical concerns, and expectations of rate cuts amidst strong economic data buoyed the market, with traders factoring in a 52 percent chance of a US interest rate drop in June.