Stock markets are likely to open on a strong note on Tuesday after SEBI Chairman M Damodaran sought to ease out the fears of a possible flight of foreign capital from Indian equities.
MUMBAI: Stock markets are likely to open on a strong note on Tuesday after SEBI Chairman M Damodaran on Monday sought to ease out the fears of a possible flight of foreign capital from Indian equities, but profit booking at higher levels could again play spoilsport, analysts said.
Marketmen said Damodaran's address to the FIIs after market close on Monday indicated a positive outlook on the regulator's views on attracting foreign capital to the market, as against the concerns about restricting them.
While thrashing reports that there were 500-600 FIIs applications pending, Damodaran said, "We have never had so many applications, at any point of time, pending at SEBI, since the process was started... It is way off the mark."
"We also heard it said that it would take up to 1-year or may be around one-year to get registered...I have with me 16 applications, that we cleared starting this morning."
Commenting on the possible impact of Damodaran's comments on Tuesday's trading, brokerage house SMC Global's Rajesh Jain said, "the markets are likely to be slightly positive in the morning but, a correction in the global markets might affect sentiments."
Besides, profit taking could emerge at higher levels and volatility would continue during the day, Jain noted. The clearing pressure due on Thursday is also adding to the high volatality, he added.
Premium Investments' S P Tulsian said that SEBI meeting did not give a clear positive or negative implication for the markets and could eventually have a neutral affect as SEBI had not made any changes in the proposal and FII have not objected either.
Those with bullish views on the market said Damodaran's comments indicated that a direct route would be facilitated for participatory notes.
Analysts said SEBI's move could also boost the number of FIIs registered in India considerably with Damondaran saying that the regulator would expedite the process of registration.
According to the latest data available with SEBI, there are 1,112 FIIs and 3,447 sub-accounts registered with it.
Damodaran told the FIIs, "There are cases pending with us and they were pending because the policy, in regards to that category of applicants, had not been clarified by the SEBI board until very recently. Those categories are also getting cleared now. I want to assure you, on the basis of evidence available before me, that if there is a question of delay, that is not to be blamed at our doorstep," he said.
The SEBI chief said that the regulator would seek to expedite the process of registration, as well as resist the content of regulation, to see what other categories of investors, that were until now kept out of the registration process, could be facilitated to access the Indian market, by being included as eligible entities in the registration process.
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