First of all it has been a long time I’ve posted a blog, so might seem like a rusty touch, but the reason is just compelling enough to shrug off the rust & state what needs to be stated. The reason mentioned above is about the Indian economy & the Indian Capital Market; both of them are in such a booming stage that one cannot afford to miss it. That boom did not compel me to write on it but the recent peccadillo that the Finance Minister of
Just a brief idea of that: there was an issue created out of nowhere that the Indian capital market was getting excessively high amount of dollar ($) flow that needs to be controlled. The solution for that so called fault was to make it compulsory for the FII (Foreign Institutional Investors) along with the Hedge Funds to register themselves with SEBI or get regulated from either
If the former reason is held to be dominant then it is absolutely ridiculous one. The countries all over the world especially the emerging economies dream of such capital inflow into the system but our Finance Minister fears of it. While Chinese economy has been growing by more than average 10% p.a. for last decade our RBI (Reserve Bank of
If the latter reason is taken to be true then first of all it seems to be too late for SEBI to check for the quality of the money coming in when the Sensex is already at the level of 19000. Also many analysts believe that there is no compliance problem with the FIIs & their issuance of P-Notes. Just they would need to get registered with SEBI which would not be too much of a problem. The real problem is with the Hedge Funds that are investing in
The fact is that the fundamentals of the Indian market are going to change with growth they are posting & with the prospects that are clearly visible. One of these fundamentals is the funds that are going to flow in & out of the market & Ministry of Finance & SEBI are just going to have to live with it & not make an attempt to fix things that don’t need fixing. Many analysts believe that all this fiasco is not going to reduce any flow of dollars coming in, instead they will only increase given the probable Fed rate cut in the offing on 30th Oct 2007 & yours truly is one of them.
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