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FIIs India Equity Strategy – GAAR / Tax Issues / Policy Paralysis

May 3, 2012

After Deepak Parekh’s return from Singapore, many Indian brokerage houses sent their Equity Chiefs to Global Financial Centers – London, New York, etc to engage their Foreign Clients. Here is the outcome of the meeting of Equity Strategists on Indian Markets.

FIIs are still very interested in the India Growth Story, but are fed with the Policy Paralysis. Moreover, they can’t understand how the Indian petty political system can deliver results given the emasculation of the two national parties. Regardless of how GAAR pans out, FIIs attention is drifting to other Asian markets like Thailand and Indonesia. Let us see what Pranab Ji will do in the Parliament in the next few days.

Hedge Funds Flee India – The Finance Minister Mr. Pranab Mukherjee’s retrospective taxing on Vodafone and GAAR have put hedge funds off from investing in India. Not a single hedge fund wants to invest in India until the FM clarifies GAAR (and why should they given that short term CGT on F&O profits is 30%)

FII interest in Indian Power, Infrastructure, Construction and Real Estate sector is at an all time low because of the Government’s impotence to handle Inflation and refraining itself from spending on Core infrastructure and pushing useless socially populist schemes.

It was a big surprise that Institutional Investors interest in forensic accounting and the use of clever structures by promoters is getting very HIGH ATTENTION. FIIs have now recognized that the “India story” now stands as much for fairy tale accounting by leveraged promoters.

Institutional Investors are of the view that American economy is clearly, albeit slowly, recovering but the European situation is terrifying as they await the next bout of ECB LTRO or should they start planning for the Euro’s seemingly inevitable collapse.

The worrying trends in India’s BoP will cause INR to weaken further. French Institutional Investor maintained target of INR55/USD by year end. This continues to be a non-consensus call; expect more currency “strategists” to get on the bus. Stay tuned!

Comments

One Response to “FIIs India Equity Strategy – GAAR / Tax Issues / Policy Paralysis”

  1. Sushil on June 14th, 2012 2:48 PM

    Boss if this happenes thn we could c the Locks on the gates of BSE & NSE….As all the politicians are running there business well by fooling the people.People of this country is made so busy into there hard earnings,they hardly able to think ofthe Policies made by Govt.The interest of the country ppl is to just earn daily & think of tomorrow.No one can think of Future of the Common man.Manmohan & pranab is the Complete failure towards the economy & towards ther duties.Above all sum commitee of this govt has made the joke of the Indian common man by saying the person who earns 35 rs daily is above poverty line….shame on the formula & the policy creators.How can they be live just on 35 rs.Thank god they didnt named Indians Indian common man as BHIKHARI’s as a bhikhari earns much more than its said for the person above the poverty line.

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