Capital Market Practices in India INDUSTRY OVERVIEW 2007-08In the previous year, correction in a bull market followed later by bear market rallies was never meant to cause widespread pessimism. Indian stock markets have indeed been in the doldrums and are still trying to reach an optimal and stable position. However, the apparent crisis has not prevented the growth of important industrial sectors in Corporate India. The well-said saying “Necessity is the mother of invention” has significantly manipulated key players in the Indian capital market to innovate new financial instruments, investment strategies and the like. Over the past year, Indian companies have used American Depository Receipt (ADR), overseas listings on AIM, SGX, LSE, etc., Global Depository Receipt (GDR), Convertible Alternative Reference Securities (CAR), Foreign Currency Exchangeable Bonds (FCEB) and Qualified Institutional Placements (QIP). It is not only SEBI that has contributed to the development of innovation by increasing the scope and enforcement of its regulations but also other regulatory bodies like RBI, FIPB, etc. have made significant contributions. With the liberalization of foreign direct investment and ECB policies, FII investments in the capital markets, which began in January 1993, increased from $1 million at the end of March 1993 to $66.6 billion at the end of March 2008. Furthermore , venture capitalists invested approximately $928 million in 80 deals for entrepreneurial companies in India in 2007. This is a 166% increase from the $349 million invested in 36 deals in 2006 – easily the highest total never registered for the region. manage the crisis, the other key player who makes a significant productive contribution to the capital market scenario such that subsequent investments do not generate suboptimal returns are the capital market lawyers. However, law firms have not only worked on innovating new forms of financial instruments. A new branch of capital market practice better known as structured finance has become the bread and butter of many law firms advising clients on securitizations, project finance, leveraged or management buyouts, etc. Capital market transactions involving corporate restructurings such as takeovers, takeovers, mergers and spin-offs, stock repurchases, mutual fund and venture capital fund formation, as well as advising issuers, financial institutions and intermediaries such as stockbrokers, underwriters, Investment bankers, portfolio managers and investors constitute a part of the work of firms engaged in the practice of capital markets.