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FPIs Pouring In Funds: What Will Samvat-2077 Offer To Investors?

Author: Dasari Sreenivasa Rao/Wednesday, November 18, 2020/Categories: Exclusive

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FPIs Pouring In Funds: What Will Samvat-2077 Offer To Investors?

FIIs infused Rs5,627.32 crore into cash market and Rs2,016.85cr into index futures, while DIIs offlloaded about Rs2,309.19 cr on Tuesday (November 17). FIIs on Monday also invested Rs4,500 cr into cash segment and Rs904 cr in index futures. The continuous investment by FIIs in November so far is propelling key indices upwards to scale new highs. Key indices tested record highs on November 17 as the news about vaccine for Covid-19 from pharma giant Moderna hit the market. BSE Sensex closed at 43,952.71 points and NSE Nifty reached a fresh high of 12,934.05 points and closed at 12,874.20 points. After taking off on a positive note in Muhurat trading, Samvat-2077 now seems to be an auspicious year for investors and institutions.

Market analysts attribute the reason for FII investments in Indian markets to positive corporate earnings, reform measures and policy support by the NDA government and better risk-reward proposition in the domestic stock markets. The present valuations turned attractive as quality value play at weaker US dollar index, opines an analyst. Hence, FPIs may remain upbeat on Indian stock market in the days to come. Select sectors such as agriculture, pharma, IT and automobiles are propelling trading volumes on the domestic bourses.

Foreign Portfolio Investors (FPIs) poured in over Rs40,000 crore into Indian stock markets in November so far. According to the latest data, during November 2013, 2020, FPIs invested more than Rs35,000 crore in equities and Rs5,670 cr in debt segment. FPI investment in October was Rs22,000 crore.

Samvat 2077 cheers Indian stock markets

Muhurat trading for Samvat 2077 opened on an optimism note as BSE Sensex gained 194.98 points or 0.45 per cent to close at 43,637.98 points, while Nifty gained 60.30 points or 0.47 per cent to close at 12,780.25 points in the one hour session. For Samvat-2076, the BSE Sensex gained 11 per cent, while NSE Nifty rose 10 per cent. Prime Minister Narendra Modi-led government announced a number of incentives, promotion linked bonuses, and relief in borrowing procedures, while the RBI recently announced interest rate cuts and made life easier for manufacturers and traders. With the recent set of announcements made a couple of days ago, home buyers and developers have also been given huge incentives. While there may not be immediate benefits, these would result in kick-starting the economy in the short to medium term.

So, what will Samvat 2077 offer for the market? The Indian government has been implementing possible measures to take the stock markets upwards infusing confidence into investors. And analysts predict that the measures will yield results going forward. Take for example the auto industry. They were in dire straits and things seemed to be really bad for them. Covid-19 has turned out to be a blessing in disguise with the need for personal mobility becoming the need of the hour. Two-wheelers and entry-level passenger cars are selling like hot cakes and the demand is seemingly never ending.

Let’s look back at Samvat-2076 and what it delivered for the markets? On Samvat-2076 Muhurat session, BSE Sensex added 192.14 points, while NSE Nifty rose 43.20 points. There was double digit returns on the BSE SENSEX with it rising from 39,058.06 to 43,443 points, a rise of 4,384.94 points or 11.23 per cent. Nifty rose from 11,583.90 points to 12,719.95 points, to gain 1,136.05 points or 9.81 per cent.

Samvat-2077 Muhurat sessions, the markets witnessed healthy economic signs as well as foreign fund inflows lifted both the key domestic equity indices to new record highs during the intra-session trade.

Encouraging buying was recorded in almost all the sectors with the rally being led by banking, auto, IT, realty and pharma stocks. Pharma shares had an excellent run. Dr Reddy's was up about 75 per cent while Cipla, Sun Pharma and others chipped in with gains between 25-50 per cent. Reliance Industries had a spectacular run post Covid-19 and rose from a low of Rs 868 to a high of Rs 2,370. However, on a Samvat year basis, it gained 41 per cemt.

Further, encouraging global liquidity will ensure positive trading in the year ahead and this is giving plenty of hope for the investors. The stock markets have already discounted the crisis from the Covid-19 pandemic as half a dozen vaccines likely to hit the market. The cost cutting exercise by India Inc and charting new business models will enhance corporate performance. Moreover, liquidity is abundant as funds are available at such cheap rates and with people having realised the benefit of borrowing only when necessary and having seen the Lehman crisis of 2008, it is unlikely that the event could be repeated.

BSE members can execute F&O orders from US customers

The registered members on BSE are allowed to accept futures and options (F&O) orders and related funds from customers located in the US for futures and options transactions on the Indian stock exchange without registering as a futures commission merchant. Sameer Patil, chief business officer, BSE, in a statement said members will get advantages of the CFTC 30.10 Exemptive Relief. Patil further added that “BSE had applied for this exemptive relief in a representative capacity, on behalf of its members. This is a welcome move as it will benefit the BSE members and provide the US customers increased access to Indian futures and options markets.”

BSE in the statement said that it has received an order from Commodity Futures Trading Commission (CFTC) granting an exemptive relief under CFTC Regulation 30.10 to designated members of BSE from the Commodity Futures Trading Commission.

The latest decision by BSE will benefit designated members of the BSE from the application of some CFTC's foreign futures and option rules, the statement added. Under CFTC Regulation 30.10, persons located outside the US, who are subject to comparable regulatory framework in the country in which they are located, should seek an exemption from application of certain CFTC regulations, including the requirement of registration. With the order now, the members of BSE will now be required to seek fresh registration for futures trading on behalf of customers located in the US.

The writer is a business journalist with 27 years of experience

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