Market watch: All is well that ends well
A saga which began with the threat of stifling capital inflows into our stock market is about to end with the result of broader, more transparent entry guidelines for most foreign investors, writes Udayan Mukherjee.business Updated: Oct 26, 2007 00:23 IST
A saga which began with the threat of stifling capital inflows into our stock market is about to end with the result of broader, more transparent entry guidelines for most foreign investors into India. Some hedge funds who are not regulated in any jurisdiction will possibly find it difficult to access this market unless the attraction of investing in India overwhelms their reluctance to be "regulated".
The ball is in their court, some will bite, others not. On the other hand a number of other categories have been welcomed under the new norms.
Relaxations like the one year track record and that for broadbased funds are welcome and would make life easy for many of the newer funds.
Investment bankers will be a bit sore on IPOs being clubbed under the 40 per cent ceiling. That could have been treated separately. That aside, there could be some grey in the actual AUC calculation, which SEBI says would be as per custodian norms. Custodians don't recognise deriavtives under AUC. This may create some confusion. Such a transition would always have areas of confusion, that's quite inevitable.
In the end, this looks more like a process which ends the P note regime and induces a transition to transparent registered entities. Sure, P note money will not come in for the next couple of months and we will probably see slower inflows than we might have in this seasonally fertile period, given the strength of our market.
That aside, there doesn't seem to be anything hugely damaging for the market as such. There will be some cribbing for the next few days and then people will simply get on with the business of registering and investing. Some hedge funds will be sore but life will carry on. Decks are cleared for the market. Unless there is any adverse global signal, the market should hold it's uptrend. A sigh of relief : as they say, all's well that ends well.
(The writer is Executive Editor, CNBC-TV 18)