BT India@100 Summit | You don't need to be Warren Buffett in India to multiply wealth: NSE boss Ashishkumar Chauhan

Ashishkumar Chauhan, Managing Director & CEO at NSE has said that India has a phenomenal room for growth in the next 25 years and that the technology is going to bring in phenomenal change. Speaking at BT India@100 Summit, Chauhan said what India is doing right now, the T+1 settlement cycle, is science fiction for others.  "It is not only a technological progress, but a societal one," he said.

Chauhan said the domestic stock market had a market capitalisation (m-cap) of Rs 4 lakh crore when NSE started operating in 1994. Twenty nine years has passed and that m-cap has gone up 80 times. In dollar terms, he said, the m-cap jumped 30 times to $3.7 trillion from a mere $120 billion.

"If you had invested in Nifty then, you would have been as rich as Warren Buffett today. You don't require to be a Warren Buffett in India to multiply wealth," Chauhan said adding that the $3.7 trillion wealth that NSE represents is one-third of India's total wealth.

"One out of every three rupees that India considers as wealth including buildings, land and jewellery etc is coming out of the stock market," he said.

Besides, while 20-50 lakh people used to trade with NSE in early days, today the number has jumped to 7.5 crore unique PAN numbers. That translates to five crore households or 17 per cent of India's total households. Add EPFOs, it is one out of every three households is directly or indirectly connected with NSE, Chauhan said.

Stock market & nation building

Chauhan said after the Harshad Mehta scam, the government wanted to have a stock exchange that is not influenced by brokers. The government told IDBI Bank to set up NSE. Initially, five people were selected and Chauhan, being a banker, was one of them -- and the NSE story began. Chauhan noted that post-independence, India wanted to be a socialist country and the stock market was initially tolerated, at most. It was called 'satta bazaar', he recalled. 

"They were never there to create nation building. Only after 1991 when India started liberalising, and we saw how the rest of the world was using markets for nation building, capital formation, wealth and jobs creation. We wanted to something clean, which automated and it was a wish. Between 1992 to 1994, we planned and executed. It was a Sci-Fi movie happening and nobody thought these 'dhoti topiwalas', who don't understand the competitors... remember in those days, it used to take 5 years to get a telephone line at home and, to make it work, you had to pay bribe to the linemen," Chauhan recalled.

From that situation to create an exchange, where you work on a screen and match up, and be available anywhere in India continuously was a total sci-fi thing and, somehow, it happened, Chauhan said.

"It was the largest technology demonstrator India had; it was a largest demonstrator of brain power in India in early 1993 and 1994. After that Y2K came and India's IT prowess started getting known to the world. But every IT companies those days used to bring their potential white clients to NSE to show them what potential India has," Chauhan said.

Chauhan said NSE only started stock market revolution, it started IT revolution and wireless telecommunication revolution. When NSE started in 1994, it had a m-cap of Rs 4 lakh crore. Today, it has gone up 80 times. In dollar terms, the m-cap has jumped from $120 billion to $3.7 trillion, more than 30 times, he said.

Wise advice

Buying in the morning and selling in the afternoon is not investment, Chauhan said, adding that it is basically 'satta'.

"My humble request to every investor is that please don't indulge in derivatives trading if you don't know about it. Please don't buy in the morning and sell in the evening by watching television or reading reports and acting like you will earn billions in one day. This is a place to create wealth and not to lose whatever you have. If you don't know or don't have the time or expertise, go to mutual funds, go to portfolio managers but don't believe in some tips that come to you," he said.