Indias growth, the second-fastest among the worlds 20 major economies, has been luring foreign investors especially border funds. As per SEBI estimates, of the total foreign stake in Indian companies ,51.6% of the assets under custody is through PNs .The main reason for the jerky spurt in PNs is due to the regulation imposed by SEBI on who can register as an FII. As hedging funds cannot register as FIIs the only r bug oute of entry available to them is through PNs.
The appreciating rupee, the galloping stock grocery and the forethought of their being a break in the stock marketplace bubble was an immediate source of concern to both the rbi and the Finance Ministry .This led them to pressurizing the SEBI to come out with regulations on illegalise of PNs.
Background
Growth of the stock market
It took the index a little over 20 years to evanesce the first 10,000 mark besides a just a little over 20 months to double that score Economic Times,29th Oct 2007.
This statement best brings out the core issue behind the participatory note saga.
The Indian stock market achieved unprecedented highs in the recent past. The Sensex get across 20,000 for the first time in its history on 29 October 2007. It took the market only ten trading days to reach from 19000 to 20,000.
Part of the euphoria surrounding the Indian stock market is due to expectations that the US Federal Reserve would cut its engagement rates. This, along with the recent subprime crisis in USA, has weakened investor sentiments towards US stocks, and is in all likelihood to benefit India.
Historical growth of Participatory Notes in India
PNs argon financial derivative dicks used by investors or hedge funds not registered with SEBI to invest in Indian securities .Foreign investors name been enticed by India ever since it began liberalizing its financial markets in 1990s. PNs represent an instrument that satisfies the need to regulate equity inflows while attracting sufficient portfolio investment. Prospective...If you expect to get a full essay, order it on our website: Ordercustompaper.com
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