• PAGE ONE
• INDEX
• HOME

Sinha plans pep talk with FIIs

Our Bureau

NEW DELHI, Sept. 19

THE Government has sought to alleviate the fears of foreign institutional investors, who had sold heavily last week in the local markets, following the terrorist strike in the US with the Finance Minister, Mr Yashwant Sinha, holding talks with overseas i nvestors in Europe and the Far East.

The teleconference with select institutional investors by Mr Sinha is aimed at bolstering the sentiments of portfolio investors and to restore confidence. The FIIs were net sellers during the major part of last week, shortly after the attack in the US.

The Government is now on a overdrive to contain any potential steep fall in the capital markets as reflected in a series of measures it has proposed earlier this week.

This includes raising the portfolio investment limit for FIIs from 49 to 74 and 100 per cent depending on the sectoral limits. The other proposals which are to be implemented are introduction of margin trading, changes in the norms relating to creeping a cquisition, easier share repurchase plans for companies and increased powers for the capital market regulator, SEBI.

The SEBI board is expected to meet shortly to increase the creeping acquisition limit from five to ten per cent and also to discuss a proposal for easier norms for share buybacks.

These proposals are expected to boost sentiment in the market and the signal which has been given to the FIIs is that there will not be any let-up in carrying out further reforms in the capital market.

The Finance Minister's decision to address the constituency of FIIs could also be based on the fact that during 2000-01 the net capital flows have been lower at $9 billion compared to $10.4 billion in the previous year. The net inflow of funds from FIIs during 2000-01 was lower at $1.84 billion ($2.13 billion). The flow of FDI has also not been encouraging during the last year and if portfolio flows also taper off, there could be a strain on the balance of payments front.