FIIs have turned sellers in the last 2days in Cash and Derivative segment and many question has been raised will FIIs be taxed in line with Brazil as many countries readying to tax inflow which is disturbing local currencies which is becoming stronger reducing their export capability, speculation Indonesia’s regional policy makers will restrict capital inflows dragged Asian market. In India there has been strong denial from Government, and in my view India can’t afford to anything which will reduce or stop inflows at this stage and we will see more views on this.
PN-Participatory notes are around 16.5% of the total FIIs investment so there is no panic button. India Corporate need $15Billion in QIP by this fiscal and Government also needs equal amount and IPO lined up by Corporate India before this fiscal if included India needs anywhere between $35-40 Billion dollars in next 4-5months.
Deputy Chairman of the government's planning commission Mr.Montek Singh Ahluwalia said India has india needs to invest $500 billion on infrastructure over the five years to 2012.
Global fear of taxing huge surge of inflow will be boon to India as a country we need more flows and possibility of funds routed here widens, but trouble will come only if this money is hot money or Dollar carry trade funds, as Dollar Index is showing a bottom formation and chances of the index rebounding sharply is possible in my view, which would push down Crude and Commodity prices and that can arrest asset price inflation which worries many countries and it would also see outflow of money from riskier asset.
And what would really worry FIIs and other investor is how strong Government is committed towards reforms.
Government couldn’t conduct parliamentary affairs in the first 2days and house was adjourned and government has bowed to pressure of opposition and own coalition partners in Sugar cane price issue. Dec 21 winter session of Parliament to end and how many bills will be passed and already some indication of Insurance bill unlikely to be passed in this session are reported by media.
Banking reforms mainly merger of Banks which boosted Market on Friday, will government be strong enough to go head Banking as unions call for a strike on November 16th and Telecom scam issue has the possibility of Ally turning foe as we have seen in the last 2days.
Coming week has derivative settlement and parliament session both together can create Volatility but important in my view would be Reforms we saw market giving thumbs-up by upper freeze on 18/May/2009 after the new Government got elected and expectation are running high and any failure to deliver will slow the economy and market would always sense this ahead and would react.
Nov 30: GDP estimates for the Jul-Sep quarter to be detailed by CSO.
http://www.
Parliament nod unlikely for insurance bill http://in.reuters.com/article/
NEW DELHI (Reuters) - India is not considering imposing a tax to curb an influx in overseas funds, and indeed wants an increase in inflows, the deputy chairman of the government's planning commission said on Friday.
Foreign investors have so far bought more than $15 billion of local equities in 2009, after selling $13 billion in 2008, helping send Indian stocks up about 75 percent and lifting the rupee to its highest in more than a year.
Brazil and Taiwan have taken steps to curb hot money inflows, and other governments are keeping a watchful eye on inflows, wary that they could fuel asset price bubbles.
"It (capital flows) is rising but we want it to rise a little bit more," Montek Singh Ahluwalia told Reuters when asked whether government was considering restrictions on capital flows.
Asked if there was a possibility of India imposing a tax to curb capital flows, he said, "I will certainly not."
Ahluwalia, deputy chairman of the Planning Commission of India, a government body that advises on key economic issues, said foreign funds were needed for developing infrastructure such as road projects and were unlikely to create asset price bubbles.
"Bubbles only happen if you can't use the money productively. We should be able to use it productively," he said outside his office.
India has said it needs to invest $500 billion on infrastructure over the five years to 2012.
Nov. 21 (Bloomberg) -- Asian currencies fell this week, led by Indonesia’s rupiah, on speculation regional policy makers will restrict capital inflows to prevent appreciation that may hurt exports. http://www.bloomberg.com/apps/news?pid=20601091&sid=aXjWX5HV_Zk4
