Even as the government withdrew the controversial FPI surcharge providing much-needed relief to the stock markets, the continued participation of the foreign funds would depend on the economy's ability to fight domestic and global headwinds, said a market investor.
Even as the government withdrew the controversial FPI surcharge providing much-needed relief to the stock markets, the continued participation of the foreign funds would depend on the economy’s ability to fight domestic and global headwinds, said a market investor. The government’s move is however expected to improve investor sentiment and the fund inflows are likely to restart now, said Puneet Maheshwari, Director at UPSTOX. The other reform measures such as exemption of the angel tax on start-ups and immediate recapitalisation of public sector banks are the other add ons that may see some momentum returning to banks, infrastructure, automobile, and real estate sectors, he also told Ashish Pandey of Financial Express Online.
Here are the excerpts of the interview:
What should stock markets make out of the announcements made by the Finance Minister Nirmala Sitharaman? Is the government headed in the right direction?
The Finance Minister Nirmala Sitharaman last Friday had announced a slew of measures which are steps in the right direction to lift market sentiments and put India’s growth back on the fast track. The FM chose to take a multi-pronged approach to achieve this objective by announcing measures to boost consumption, improve investor sentiments and infuse greater liquidity into the system. Steps like removal of the increased super-rich tax on foreign and domestic equity investors, exemption of the ‘angel tax’ on start-ups and immediate recapitalization of public sector banks by infusing Rs 70,000 crore are likely to revitalize the economy and boost economic growth. We can see some momentum coming back into sectors such as banks, infrastructure, automobile, real estate with these decisions.
Will FPIs once again begin investing in the markets?
The recent measure are all likely provide some support to the investor confidence, both domestic and foreign players, including the FPIs (Foreign Portfolio Investors). The Indian markets had seen huge FPI outflows in July and August. The recent relief to FPIs is likely to restart the inflows. However, their continued participation in the long run will depend on how well the Indian economy is able to fight the global and domestic headwinds to get back on the high growth trajectory.
What is your advice for an equity investor in this volatile market scenario?
Playing the volatile markets require lot of experience and skill. It’s best for the first time investors to think long-term and refrain from making risky deals.
How much more can the stock indices go down from here?
The Finance Minister has already stated that there will be more measures announced in the coming weeks to revive economic growth, which will further boost our markets. The indices are likely to react the way and we may expect an immediate positive reaction whenever such measures are announced. The long-term market performance will be determined by how our economy absorbs these impetuses and the commensurate GDP growth rate. Along with the macro-economic indicators, global market performance and the outcome of the global trade tensions will also determine the market direction.