January 13, 2012 (Powerhomebiz.com) In a significant policy announcement by the Government of India, foreigners can now directly invest in Indian equities. This includes foreign individual investors and pension funds. The move has been welcomed by the Indian stock punditswho felt something needed to be done as quickly as possible to boost investor confidence. Although the Indian stock markets have seen volatile trade in the past couple of months, India is still amongst the best emerging markets for investment.
As per IndiaCompanySetup.com (indiacompanysetup.com), the new announcement will not only help more foreign money coming into India, it will also help lift the mood of local Indian investors. Due to the ongoing economic crisis in Europe and the problems in the Euro zone, many investors have pulled out of the Indian markets and many are not sure if the markets have seen the worst as yet. Domestic issues such as large scale corruption and scams as well as rising inflation pressures have made investors wary of the market.
There was also a growing feeling that the Government was reacting too late on what was happening in the economy and was preoccupied with pressure from opposition and NGOs regarding corruption scandals. Investors were also worried that India was headed to a place where no significant policy announcements would be made after the debacle of the retail FDI announcement. Allowing foreigners to directly invest in the Indian equities market has come as a welcome relief for many who were keenly following whether Indian policy makers would be able to take any concrete steps to raise investor confidence.
According to IndiaCompanySetup.com, there was also pressure on the government to take steps to stop the fall in value of the Indian Rupee. In fact Indian rupee was one of the worst performing currencies in Asia in 2011 and lost a lot of value to the US dollar. With more demand for the rupee by foreign investors, hopefully it will help it to gain back some of the lost value in 2012.
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