Sebi has allowed option T+1 settlement in the cash market – a move that has left several FPIs concerned. What is your view on this new Sebi circular?
The move to T+1 would certainly be a progressive step which is currently being explored by the US too at this time. T+1 settlements would help reduce settlement risk and can potentially lead to increased activity thanks to the improved efficiency in capital deployment. In our conversations, what we hear from domestic clients, particularly retail and platform providers is that they very much welcome the T+1 model. However, the FPIs are concerned about potential impact on their processes around timelines and funding patterns. Sebi has wisely decided to let the invisible hand of the market players decide the best next steps.
What sort of impact do you think it would have on India as an investment destination for foreign funds?
Investors choose markets based on several parameters and India has been one of the preferred investment destinations for over three decades now. In a world dominated by technology like never before, it is important that we constantly deliver improved products and efficiencies to our investors. In fact, if we can pull off the experiment successfully, then FPIs could view the market as more attractive than before, thanks to the improved efficiencies.
India has been one of the best performing major markets in the world for the last few months. How do you see the market performance going forward?
History tells us that most periods of economic distress are followed by economic booms. So what we are witnessing is one such period of good recovery which can certainly be sustained with additional policy impetus where required. Taking the GDP to pre-Covid levels and further beyond has to be the first milestone. With several interesting IPOs lined up and positive news continuing to trickle in, we can expect the markets to be buoyed by increased investment activity, both from domestic as well as foreign investors.
India has seen a total of Rs 75,000 crore inflows this year (equity and debt put together). Do you think this momentum will continue?
We have seen a few IPOs in the recent past that have attracted significant interest from FPIs and several more of them are in the pipeline. With the kind of economic recovery seen in the last quarter, coupled with recovery on the Covid front, we can certainly expect the momentum in investment flows to continue, across FDI and FPI.
How are things looking from a new FPI registrations point of view?
India has been one of the top performing markets in 2021, and there are several positives at this time. So, we can expect continued interest from foreign portfolio investors, both existing and new. We have seen a similar significant spike in the number of demat accounts opened too, within the domestic space.
