The Employees' Provident Fund Organisation's decision disallowing investment of up to 15 per cent of its corpus in stock market will not impact the market in a negative way, as it is yet to receive any investment by the fund to date, analysts say.
"Market had not been excited when the Finance Ministry brought in the proposal last year. At present, the market does not see any urgency of new funds coming in to support it as Foreign Institutional Investors (FIIs) are already parking their funds here. The impact of the EPFO decision would not be disheartening for the Indian market," Ashika Stock Brokers Research Head Paras Bothra said.
The Finance and Investment Committee of the EPFO has rejected the proposal for parking up to 15 per cent of its funds, totalling around Rs 1,82,000 crore, into shares of listed companies as also equity-linked schemes of mutual funds.
The Finance Ministry had in August last year suggested a new investment pattern for the EPFO. Director of Kejriwal Research and Investment Services Arun Kejriwal said, "It's a bad thing for the market. But on the positive side, as no purchases were made by the fund to date, it would not affect in the short term. But going forward, it is a blow for the policy and a loss of opportunity to earn a higher rate of return than the rate of interest."