The recent Cabinet reshuffle that brought in Santosh Gangwar in place of Jayant Sinha as minister of state (MoS) for finance has surprised fund managers who say the move will, however, not make any impact on their investment policies, which are based more on economic fundamentals.
“It was unexpected as many thought that Jayant Sinha was doing a wonderful job,” said the head of a large foreign brokerage. “Many found it comfortable to deal with him given his background. In fact, during the previous confusion regarding the retrospective tax levy, it was Sinha’s interactions (with foreign fund managers) that provided clarity. It calmed many FIIs (foreign institutional investors) who were worried and confused.”
Jayant Sinha has been moved from his position as MoS finance to MoS Civil Aviation.
Sinha, 53, an MBA from Harvard and formerly an investment fund manager and management consultant with Omidyar Network, is well versed with the thinking of FIIs and hedge funds. When the tax department in 2015, slapped a $3.3-billion tax demand on Cairn Energy for gains made from a transaction eight years back, it stirred a commotion that unnerved many FIIs and foreign companies. The situation took a lot of interactions with the government until finally the finance ministry said in February this year that the retrospective tax would not be applied, and offered companies a one-time offer to settle all such cases. Fund managers said it was Sinha’s meetings during these times that calmed markets.
However, domestic market intermediaries say the focus today is more on what is happening globally.
“There is a lot of uncertainty regarding China and it is a bit unsettling that this factor is not being considered,” said Mayuresh Joshi, a vice-president at Angel Broking. “Also, the credit default swaps are widening indicating worries on the financial system.”