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18
January 2017
Capital
market regulator SEBI on Tuesday said It would be "too early" to hold
the central government's demonetisation move responsible for the massive
pullout of foreign portfolio investment from India during the October-December
quarter in view of vital international developments during the same period. The Total Investment & Insurance
Solutions
Addressing
an interactive session, Securities and Exchange Board of India Chairman U.K.
Sinha cited the US Presidential poll results and the increase in Fed interest
hikes as crucial global happenings. The
Total Investment & Insurance Solutions
He said
more time was needed to analyse to what extent the banning of Rs 500 and Rs
1,000 currency notes has prompted the Foreign Portfolio Investors (FPI) to pull
out $11 billion from India's capital market during the third quarter of the
current (2016-17) fiscal. The Total Investment
& Insurance Solutions
"There
is no hard data on this. Data will be available only after 3-4 months. But, on
the very day the decision (of demonetisation) came into force, the US
presidential results also came out.
"That
had an impact not only on India but other parts of the world as well. It is too
early to analyse and say that it has gone out because of cancellation of legal
tender. The Total Investment &
Insurance Solutions
"Besides
in USA, the Fed enhanced the rates," he replied to a poser on whether the
decision to demonetise the currency notes was responsible for the massive
flight of FPI from India.
He said
there was a feeling among investors all over the globe that the US dollar would
become strong and money from other geographies will travel to the US.
"What percent is because of the cancellation (demonetisation oF old Rs 500
and Rs.1,000 notes) and what percent is because of US elections will be
analysed, but it would take some time," he said. The Total Investment & Insurance Solutions
However,
he said the role of FPIs to affect market sentiments is now limited in contrast
to earlier times, when Indian markets were highly dependent upon the foreign
capital inflows.
"In
2015-16 the foreign flows were negative. It was negative across the emerging
markets and not just India. Between October-December, $11 billion foreign
portfolio has gone out of India. But our market has held on. The Total Investment & Insurance
Solutions
"So,
we must appreciate the strength of the market. If this (FPI) would have gone
out even three-four years back, the market and Rupee would have
collapsed," Sinha said. The Total Investment
& Insurance Solutions
He said
as per International Monetary Fund projections, demonetisation would have only
a short-term impact on the Indian economy. The Total Investment & Insurance Solutions
Sinha
also lamented the lack of Initial Public Offering proposals from east India,
even in the backdrop of a happening primary market and SME segment in other
parts of the country. The Total Investment
& Insurance Solutions
Terming
the business model of regional stock exchanges like the Calcutta Stock Exchange
(CSE) as "obsolete", he said these were acebound to fail". The Total Investment & Insurance
Solutions
Pointing
out that 19 stock exchanges have exited over the past three years, he said:
"In case of CSE, my feeling is that we are not getting the required
cooperation of shareholders and the matter is sub judiceaI don't see any chance
of regional stock exchanges surviving." The Total Investment & Insurance Solutions
About
the long-term capital gains tax, Sinha said the SEBI has stumbled upon
instances of investors and brokers using the stock exchange route to avoid
paying taxes. The Total Investment
& Insurance Solutions
He said
the amount of suppressed income was over Rs 10,000 crore, with Kolkata being
"highly over-represented."The
Total Investment & Insurance Solutions
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