Foreigners to Invest in the Indian Stock Market

In an effort to brace investor confidence and magnetize capital from abroad, the Indian government presented a New Year gift to the Indian stock markets by allowing qualified foreign investors (QFIs), including foreign individual investors, pension funds and trusts, to invest directly in Indian stock markets from January 15. Till now, QFIs were permitted to invest in India's equity market through indirect routes such as mutual funds, or through institutional mediums. This stratagem will: ameliorate capital inflows; open up the class of investors; expatiate the Indian capital market; open a new opportunity for investment; integrate India with worldwide financial markets; make it easier for affluent investors to buy Indian equities; attract new foreign funds; condense market volatility; and liberalize Asia's third leading economy especially after 2011’s beating on the benchmark Sensex Index.  The year 2011 witnessed: BSE Sensex exuviate nearly 25%, making it the worst performing key equity market; record inflows of $29 billion in 2010 bowed into outflows as foreign investors traded shares; FIIs towed finances due to growth falling below 7% and commonly  publicized complexities in getting regulatory clearances; and the net  outflows exceeding $450 million. This year the government is enthusiastic and eager to reverse the 2011 trends. Despite the existing hiccups, India is one of the most denuded Asian economies subject to global funding risks. India is recognized as an inexpungible promising investment destination given its strapping economic growth, preeminently when the developed economies are still struggling. 

By: Vidhi Agarwal