Saying that the firms need funds for expansion and implementing new projects, the survey which was tabled in the parliament today said resource mobilisation has continued to suffer from poor investor response in the primary market both for public and rights issues. It pointed out that lack of sustained buoyancy in the secondary market has also contributed to the poor investor interest in the primary market, it said.

Indicating that all is not well on the stock market front, the survey has expressed concern over the increasing volatility in the stock markets in the wake of South Asian crisis and imposition of US sanctions. It said there has been considerable volatility in trading with maximum in June, justafter the nuclear blast. The BSE Sensex crossed the 4,000 mark in April but declined to 2934 points in August before crossing 3,400 points in January 1999.

The revival of capital market was important for industrial growth because firms -- in both the public and private sectors -- need funds, which could be raised through diverse instruments to finance new projects as well as expansion, modernisation of existing projects, the survey said and added that the revival of secondary market assumed considerable significance because conditions in the secondary market typically exert significant influence on the primary market.

Continuing its review of the performance of the capital market in the current year, the survey said movements in share prices reflected longer spells of bearish phase and shorter spells of bullish phase. Sensex, which closed the previous financial year at 3893, crossed the 4,000 mark in April, registering a steady decline thereafter and closed at 2934 by end-August, 1998. It crossed the3,000 mark in September and remained above this mark, before declining to 2878 on October five. After remaining below the 3000 mark for nearly three months, Sensex again rose to 3055 on December 28 and closed at 3433 on January 11.

On the role of FIIs, the survey pointed out that their response to investment in the Indian market was affected by the reduction in their exposure to Asians markets. During the first nine months of the current financial year, the investment by FIIs was negative by $ 634.3 million -- from $ 9,284 million to $ 8,650 million, reflecting a decrease of 6.8 per cent.

On the primary market, it said the amount raised through equity issues during April-December 1998 (Rs 705 crore) was very low but there was an increase in total fund mobilisation during the period over the corresponding period last year. However, this is a steep fall when compared to the mobilisation in the previous two years.

The total fund mobilisation (debt plus equity) in the current fiscal upto December was Rs3,929 crore compared to Rs 3,092 corre in the corresponding period last fiscal. However, the survey said infrastructure companies especially in the power sector could help in reviving the primary markets and bring back investors to the markets.

The survey said most of the recommendations made by the informal group on primary market have been accepted by the SEBI. Measures taken to boost investor confidence in the secondary market includes the Companies (amendment) Ordinance and the framing of Sebi regulations enabling companies to buy back their shares, requirement to publish unaudited results by listed companies on quarterly basis, amendment of Sebi Takeover Regulations, rolling settlement in respect of demat securities and stringent margin requirements to curb excess volatility in shares prices. ``Relaxations announced by Sebi in respect of public issues by infrastructure companies can be expected to encourage public issues by these companies," the survey said.

Survey said good response for publicissues by companies in the power sector is expected as fast track power projects are counter guaranteed by the central government, public issues by them should be in a position to get better response from investors.