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Saturday, October 09, 2010

India to Lift ban on Foreign Retail buying of Indian Stocks

This is the heading of a recent article in Bloomberg (link)
Is this about retail participation after all as mentioned in the article?

The Foreign funds have poured in 92 Billion dollars since the doors were opened in 1993 and in the year 2010 itself India has  already received a record 22 billion USD till date.

I think its a small step in the bigger scheme of things. The bigger scheme of things is the collapse of the dollar as the reserve currency and the emerging reserve currencies such as Euro, Yuan.

The Rupee is looking to attract a slice of the pie (with backing from certain power brokers..) The yuan has everything running its way except that its not free and China is not free.

What is needed is a country where there is a rule of law ..(Not because law's will be fair to all..  The reason is "LAW" can be influenced .. the rules can be amended as desired by the business men ) Business Men sounds more interesting than "Power Brokers"

Indian Rupee is being setup as a vessel to hold the wealth as dollar enters the lost decade, today's announcement of direct Foreign retail participation (not yet declared ) is to allow the transfer of dollar assets into "Rupee Assets" as the Dollar goes through the turmoil of excesses of the past.

Foreign investment limits have also been increased for Govt and Corporate debt markets. Well some might say this is really good and India has "Arrived"

Far from it .. India has thrown its hat in the ring as a contender .. it has not been declared a winner.

Just like in any good corporate there are always a number of bright ideas with their mentors.. and a corporation would like to have all the brightest ideas on the table..  However there will be a tussle and may the best team win.

One must remember that whether its Team A, Team B, Team C or Team D.. the real winners are the Promoters who own the corporation.. yes the Rupee team might have the satisfaction of being declared the winners .. the adrenaline rush of a good fight. One must not forget.. which ever team wins since the promoters are the same the true winners are the promoters.. (a.k.a Power Brokers, Business Men)


What'sUp Prahalad said...

Not clear in my writeup is this information in the back of my mind..

The Indian Govt (SEBI or some other Govt body)had discovered that within an FII Fund of say 100 million there were 5 investors investing 20 million each.

each of the 5 investors were directly controlling (from the buy sell activity)what amount was being invested and where it was being invested..

The 5 investors had pooled their resources and registed as an FII through a renouned brokerage like Morgan Stanley (MS is a place holder and I dont know/remember the brokerage house name)

This was happening because the govt had rules that registered FII should have "X" million as capital and should invest in more than "Y" number of companies..

Retail Foreign direct investment was not allowed and these "High Networth Investors" just side stepped the rules.. to get in.

That is why there are not a couple of dozen but 100+ FII's registered as investors in India.

Money is pouring in ..

=happy investing

rajsmusings said...

Hi Prahalad,

Very interesting and insightful post. Thanks :)