The decline in stock values has created room for the issue of fresh participatory notes, but there are not many takers. P-notes are off-shore derivative instruments issued to foreign investors having securities as underlying. Sebi had banned the issue of derivative P-notes on October 25 last year. Brokers have started focusing on direct FII money rather than the P-note investments. New P-note regime & FII registration procedures are being implemented based on Sebi circular.
Move follows 26 per cent acquisition in Ahmedabad's NMCE.
C S Bhave has to work on the homework of his predecessor to speed up the processes in the market. He also has to contend with the bitter legal battle between Sebi and his organisation NSDL.
Fresh investments through participatory notes (P-notes) are flowing into the cash market in huge quantum. The rush of investments is because foreign institutional investors (FIIs) have enough headroom to invest through P-notes.
Stocks lead the chart with 50 per cent returns, followed by real estate and gold. The markets may be expecting a correction now, but the year has been a spectacular one for those who had put money in stocks. Equities gave a return of 49.64 per cent, the same as in the last three years.
Foreign institutional investors, who are big players in the futures and options segment, are making a killing in the domestic market by using arbitrage as a weapon in the spot and derivatives trade as well as structured derivative deals. The arbitrage game is on despite the curb on the issue of P-notes or participatory notes by the Securities and Exchange Board of India recently.
The Indian markets look extremely stretched. The Sensex valuations have gone up 19.28 per cent to 26 per cent since the lows triggered by the sub-prime crisis two months ago. Taiwan and Kospi, on the other hand, have not changed much. A Citi group report suggested that the RBI might hike CRR rates to suck out excess liquidity from the system. An increase of one per cent would draw out $7 billion from the system.
The curbs on participatory notes (P-notes), announced by the Securities and Exchange Board of India (Sebi) on Thursday, have virtually ended a flourishing business of many leading foreign institutional investors (FIIs). Observers said the brokerage fees for offshore P-note transactions were nearly four times higher than those prevailing in the onshore market in India.
According to estimates by Citigroup India, P-note investments, excluding the underlying shares, account for 34 per cent of FII assets with custodians in BSE-500 companies. Sebi stipulates that P-Notes can account for up to 40 per cent of FII assets under custody. This leaves room for FIIs to increase their exposure through P-notes 6 percentage points.
Regulating PNs are important when the country has some restrictions on foreign investments. Countries having full capital account convertibility do not need FIIs to even register.
When Dhirubhai Ambani entered with his big bang public offer the foundation for the Indian stock market was laid.
The commodity futures market has started losing its sheen after a stupendous growth rate of 96.05 per cent in the last financial year
Traders said it is unusual that the grey market is active even after the issue subscription has closed. DLF grey-market shares were priced at Rs 525 per share.
The market regulator decided to set up an investor protection fund. It also approved delisting guidelines, regulation of investment advisors and the consent order scheme.
While a scheme allowing short-selling of securities is expected to come into force from July, exchanges and depositories are finalising a mechanism for lending and borrowing of securities, without which the scheme cannot be implemented.
Rakesh Jhunjhunwala of RARE Enterprises, a high-profile investor, talks to Business Standard on the state of the secondary market and the hype around IPOs.
Early onset of monsoon has raised the hopes of rainwear manufacturers. Wholesalers have already started stocking and they expect good demand despite rising prices of rainwear products.
Dinesh Thakkar, MD, Angel Broking, explains in an interview that retail investors' participation in the equity market is falling, but the share of organized players in broking business is increasing.
The department of consumer affairs is planning to put a ceiling on the stake that a single domestic investor can hold in a commodity exchange.
The US-based Depository Trust & Clearing Corporation is planning to pick up 5 per cent stake in the Bombay Stock Exchange.
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