Previously, foreign nationals were limited to investing in India's equity market through indirect routes such as mutual funds, or through institutional vehicles.
"The central government has decided to allow qualified foreign investors to directly invest in (the) Indian equity market in order to widen the class of investors, attract more foreign funds, and reduce market volatility," the government said in a statement.
Analysts said the decision to allow foreign nationals to invest in Indian equities was a positive move but it was unlikely to result in an increased flow of overseas funds in the near-term due to weak market conditions.
"At a time when the foreign institutions are reducing their exposure to India, it would not be prudent to expect foreign individuals to start investing in our markets," said Jagannadham Thunuguntla, research head at brokerage SMC Global Securities.
"We can see some impact of this decision when the stock market conditions improve," he said.
In the past 20 years India has gradually opened its economy to foreign cash. The economy is now faltering after growing at an annual average of about 8 per cent for several years.
The rupee shed 24 per cent of its value against the dollar last year and the current account deficit is widening.
Many economists predict growth below seven per cent for the fiscal year that ends on March 30.
BSE Sensex posted its first annual fall in three years in 2011 as a combination of near double-digit inflation, high interest rates, slowing domestic growth and policy inaction turned off investors already shaken by global headwinds.
Foreign fund inflows, a major driver of Indian stocks, dried up with net outflows of about $380 million as of Wednesday, a far cry from record inflows of more than $29 billion in 2010 that had powered a 17 per cent rise in the benchmark index, following an 81 per cent surge in 2009.
Posted in: 
1 comments:
Indian financial regulators and the Government of India are following principles of world's most powerful secular democratic country where right to religion has nothing to do in economic, financial and political fields, so they will do all attempts to keep Islamic Banking and finance away from the system, no matter what the consequences upon the economy in general and tax payers in particular who bear all non sense financial management by the Government of India and the financial regulators. The cost of failing interest based system around the world is paid by tax payers, so does in India. The cost of Rs. 72,000 crore loan waiving scheme is borne by the tax payers. Nearly around Rs. 35,000 cores will be added to safeguard the Micro Finance Sector. So the Secular nation is doing all possible to run the interest based banking and finance despite all adverse consequences, but not allowing even a pilot project of interest based banking as it may open doors for Islamic Banking and Finance in India. Well done Secular Government of India! Keeps bearing the cost to block Interest free banking and finance in India soon people will find ways through lessons. Opening up foreign investors for Indian stock market may add more risk of market fluctuations compared to gearing up for local equity based through equity based banking and finance. But that may open undesired gateway.
Post a Comment