Stock markets likely to gain as Sebi eases norms for FPIs

Sebi relaxed the buyback norms for listed firms that own NBFCs and housing finance companies subsidiaries. In commodity markets, spot gold was steady at $1,502.53.

Indian stock markets are likely to gain tracking global cues and as Securities and Exchange Board of India eased norms for foreign investors. Asian shares edged ahead on Thursday after Wall Street got a boost from strong retail results, while bonds retreated as US policy makers sounded conflicted on whether to cut interest rates as sharply as markets were wagering.

Sebi on Wednesday eased the regulatory and compliance framework for foreign portfolio investors (FPI) in a bid to boost investments.(PTI File photo)

MSCI’s broadest index of Asia-Pacific shares outside Japan inched up 0.1%, continuing the see-saw pattern of recent sessions.

On Wall Street, the Dow had gained 0.93%, while the S&P 500 rose 0.82% and the Nasdaq 0.90%.

Minutes of the Federal Reserve’s July meeting showed policymakers were deeply divided over whether to cut interest rates, but were united in wanting to signal they were not on a preset path to more easing. Indeed, while a “couple” of Fed members favoured a deeper cut of half a point, “several” favoured no change at all.

That reluctance did not seem to gel with the market’s aggressive pricing for over 100 basis points of easing by the end of 2020.

Treasuries were sold in response and two-year yields rose to 1.59% and away from last week’s low of 1.467%.

Hopes for US fiscal stimulus also got a knock when President Donald Trump reversed course and said he was not looking at cutting payroll taxes. Much now depends on how dovish Fed Chair Jerome Powell chooses to be in his Jackson Hole speech on Friday.

Back home, the markets regulator on Wednesday eased the regulatory and compliance framework for foreign portfolio investors (FPI) by broad-basing their classification, and simplifying their registration, entry and know-your-customer (KYC) norms in a bid to boost investments.

In another key move, the Sebi relaxed the buyback norms for listed firms that own non-banking financial companies (NBFCs) and housing finance companies (HFCs) subsidiaries. This move will free conglomerates from the restrictive debt-to-equity ratio (DER) norms calculated on a consolidated basis for guiding buybacks.

Members of the Reserve bank of India’s Monetary Policy Committee at its rate review held on 7 August have agreed that supporting growth will remain their top priority in the midst of inflation remaining stable within the next one year, according to the minutes of the meeting released on Wednesday.

The dollar had already bounced overnight, rising to 98.263 on a basket of currencies from a low of 97.948. It also reached 106.57 yen from a trough of 106.21.The euro edged back to $1.1089 from a top of $1.1107, not helped by a gloomy economic outlook from Germany’s finance ministry.

A range of manufacturing surveys from across the globe are due later on Thursday and risks are they will show a further slowdown in activity, especially in Europe.

Also due are minutes from the European Central Bank’s last policy meeting and markets are looking for more detail on exactly when and how aggressively it might ease policy.

In commodity markets, spot gold was steady at $1,502.53. Oil prices firmed after US government data showed a drawdown in domestic crude stocks. Brent crude futures rose 25 cents to $60.55, while US crude gained 34 cents to $56.02 a barrel.

(Reuters contributed to the story)