The Reserve Bank of India’s decision to double individual exposure limits to $50,000 (Rs 22 lakh) for foreign investments has cheered Indian investors eager to invest in foreign stock markets.
Market-watchers and investors feel that traders in commodities and equities in foreign markets would be able to immediately double their exposure.
While experts say that the move is targeted more towards achieving full convertibility of the rupee, it would help investors eager to increase their presence in stocks in US and other countries.
“Traders in commodities are going to benefit from the order, as the opportunities for arbitrage play increases with increased exposure,” Dipan Mehta, member, BSE told Hindustan Times.
Equity traders too, have an advantage. However, lack of expertise and research in foreign markets may hobble the possibilities, says VK Sharma of Ahmedabad-based Anagram Stock Brokers.
“Small traders from India who mainly trade in commodities such as gold, silver and crude oil, would benefit. However, dearth of international exposure may mean we need a little more time to catch up with equity markets abroad,” he said.
Foreign brokerages though, might have the answer. The problem is, they are not very well entrenched in the markets right now.
Incidentally, DSP Merrill Lynch is the only international brokerage registered on the BSE as an international entity. High net worth individual investors may look at the possibility of investing in global markets.