Article brought to you by: Catholic Online (www.catholic.org)
Indian stock market opens up to individual foreign investors
By Catholic Online (NEWS CONSORTIUM)
January 3rd, 2012
Catholic Online (www.catholic.org)
January 3rd, 2012
Catholic Online (www.catholic.org)
India is opening up its stock market to individual foreign investors for
the first time. Previously, foreign investors were only allowed to
invest in the Indian stock market via mutual funds or institutional
schemes.
In spite of this, recent financial data in India has been disappointing. The main Sensex index recorded a 25 percent plunge in 2011. Many analysts predicting more falls in 2012.
The Indian government declared on Sunday that it had taken the move "to widen the class of investors, attract more foreign funds, and reduce market volatility and to deepen the Indian capital market." Reforms will be put in operation later this month, January 15.
Interest rate hikes, stubbornly high inflation and the rupee's slide to a record low against the U.S. dollar have all hit growth in India over the last year.
Key reforms allowing foreign supermarkets into India have been rapidly reversed, while the Congress-led government has battled against accusations of policy drift amid several corruption scandals.
Indian Finance Minister Pranab Mukherjee blamed the fall in equities during 2011 on selling by foreign institutional investors and the rupee's woes, coupled with concerns over eurozone debt and slowing domestic growth.
Annual growth in India have dropped to a two-year-low of 6.9 percent in the latest quarter and was hit by a series of interest rate hikes that have had little effect on inflation now at 9.11 percent.
Rising prices have been a major concern for the government, which has cut its growth forecast for the fiscal year to 7.5 percent from an original 9 percent.
Seven percent growth would ordinarily be something that any developed economy would envy -- but is far below the 10 percent target needed to tackle poverty in Asia's third-largest economy.
According to market regulator, the Securities and Exchange Board of India overseas funds were net sellers of $358 million-worth of Indian stocks in 2011, having been net buyers of $29 billion-worth, the previous year.
The Reserve Bank of India has increased rates 13 times since March 2010.
© 2011, Catholic Online. Distributed by NEWS CONSORTIUM.