Eye on equity-linked debentures as volatility spikes in Indian markets

FY20 had seen increasing issuances on higher demand from issuers

Instruments whose payouts depend on equity market levels are likely to be closely watched amid the carnage in global and domestic markets.

The Indian indices have entered bear market territory amid a spike in volatility. The S&P BSE Sensex has fallen over 10,000 points from its peak. The India VIX, a volatility index which is also known as the market’s fear-gauge, has also risen to multi-year highs.

Ashish Shanker, associate director and head of investments for Motilal Oswal Wealth Management said equity-linked debentures will become more expensive for issuers now. Higher volatility increases the price of issuing such debentures since