Trust & transparency: How India’s capital markets became a global benchmark

By Gopal Krishna Agarwal,

SEBI and India’s stock exchanges have laid the foundation of a fair, efficient, and technology –driven ecosystem that inspires confidence globally.

Financial markets are the backbone of capital formation — the vital bridge connecting savings to investments. Land, Labour, and capital are the three classical pillars of economic development.

 

India is abundantly endowed with land and labour but has historically faced a scarcity of capital. Despite a traditionally high savings rate, the challenge has often been channeling these savings into productive avenues. A well-regulated and transparent capital market provides precisely that channel transforming individual thrift into national strength.

 

Ø  India’s Capital Markets: Setting Global Benchmarks

 

Under the aegis of the Securities and Exchange Board of India (SEBI) and the Ministry of Finance, India’s stock exchanges have evolved into global benchmarks of efficiency and trust. Nearly 100 percent of market delivery today is in dematerialised form.  Investors enjoy complete online trading with real-time price discovery across geographies and full counterparty settlement guarantees.

 

India ranks 13th among 190 countries for minority shareholder protection a testament to its robust corporate governance framework.  Exchanges have built a sophisticated ecosystem of compliance and leveraged cutting-edge automation to enhance transparency and reliability. The result is a surge of global confidence and unprecedented participation from Foreign Institutional Investors (FIIs) and foreign Portfolio Investors (FPIs).

 

As of 31 December 2024, the total market capitalisation of NSE-listed companies stood at 439 lakh crore, with an average daily turnover of ₹1.1 lakh crore in the capital market and 2316 lakh crore in the derivatives market - figures that underscore both scale and resilience.

 

Ø  Markets Are Built on Trust, Not Just Capital

 

Markets are not built merely on flows of funds; they rest on the bedrock of trust. Every trade, every regulatory decision, and every investment reflects the investor's faith in a system that is fair, transparent, and resilient.

This trust is especially vital in India, where the capital market has become a central pillar of national growth - financing infrastructure, telecom, energy, healthcare, and innovation. Over decades, regulatory institutions have evolved steadily, ensuring that India's market ecosystem commands credibility even amid global turbulence.

Ø  The Fragility of Sentiment

 

However, market trust is not immune to external shocks. A single report, a sensational headline, or a speculative filing can trigger waves of volatility. Recent years have witnessed attempts by short-sellers and speculative entities to exploit this fragility - aiming not to uncover the truth but to profit from panic.

 

Such episodes pose two risks: one, the immediate erosion of investor sentiment; and two, the deeper, longer-term threat of undermining confidence in India's institutions. The greater danger lies in overreaction allowing isolated events to define perceptions of India's market integrity, despite a long record of resilience.

 

Ø  Hindenburg 2023: The First Shock

 

In January 2023, US-based Hindenburg Research released a report alleging irregularities in the Adani Group. The report led to a steep fall in Adani stocks, erasing billions in market value and sparking multiple Public Interest Litigations (PILs).

 

When the dust settled, however, a Supreme Court-appointed expert committee found no systemic lapses. SEBI's detailed investigation also revealed no violations of related-party transaction or listing regulations. Notably, Hindenburg itself admitted to taking short positions in the same securities a clear conflict of interest that called its motives into question.

 

Ø  Viceroy 2025: A Pattern Repeats

 

In July 2025, a similar episode unfolded. Viceroy Research, a relatively obscure foreign short-seller, accused Vedanta Ltd. of irregularities the company was proceeding with a major demerger. Vedanta immediately dismissed the report as a "malicious combination of selective misinformation and baseless allegations."

 

A PIL was again filed, but on 10 October 2025, the Supreme Court refused to entertain it. The Court questioned why entities outside India were so deeply concerned about Indian corporate affairs. The Solicitor General highlighted a broader pattern - foreign agencies releasing timed reports to influence Indian markets and trigger volatility.

 

Despite political noise and speculative commentary, investors remained composed. The absence of sustained panic reflected growing maturity and confidence in the regulatory system. The episode demonstrated that Indian investors are learning to distinguish between genuine governance concerns and manipulative short-selling strategies.

 

Ø  Institutional Maturity and Judicial Balance

 

India's institutional response has been measured and wise. The Supreme Court, in both instances, upheld SEBI's primacy as the capital market regulator, reinforcing the principle that due process cannot be hijacked by sensationalism.

 

PILs are not signs of weakness but of democratic openness. The judiciary's restraint and SEBI's professionalism have together sustained confidence in India's financial architecture.

 

Building Resilience Through Trust

 

The path forward lies not in overregulation which risks stifling tl market but in strengthening resilience through trust.

 

For companies, that means proactive disclosure, timely communication, rigorous audits, and unwavering adherence to corporate governance. For investors, it calls for patience, discernment, and faith in regulatory institutions that have repeatedly demonstrated their integrity.

 

Trust, after all, is the ultimate currency of financial markets. India's capital markets are emerging stronger from every test, proving that transparency and institutional strength are their greatest assets.

 

SEBI and India's stock exchanges have laid the foundation of a fair, efficient, and technology-driven ecosystem that inspires confidence globally. As India moves towards becoming the world's third-largest economy, its capital markets will remain not just a reflection of economic power but a measure of collective trust.

 

(The author is National Spokesperson, BJP; Views expressed are personal)