Budget Analysis: Easing FII entry norms to bode well for mkt: Ratnesh Kumar

The Finance Minister in his Budget speech today spoke about easing registration norms for a large number of global investors.

Commenting on the same, Ratnesh Kumar, MD & CEO, Standard Chartered Securities (India) Ltd told CNBC-TV18, said it can be significantly positive for the market on the FII side. Below is the verbatim transcript of his interview on CNBC-TV18 Q: There is a little bit of fretting going on of that Mauritian googly which people are not quite clear about but the FM spoke about easing registration norms or entry norms for a large number of global investors. Anything you spotted there which could give the market some relief tomorrow? A: It was something that was missed from the FM’s speech, the fact that the Foreign Institutional Investor (FII) registration process, moving to the designated DPs. As well as some amount of rationalisation of the ‘know your customer (KYC)’ process etc. Going by some of the feedbacks that we have had in the past years from investors that can be a fairly significant thing provided the fine print is also okay. That is something which is to watch out for in terms of the actual guidelines what they say etc. However, it can be significantly positive for the market on the FII side. The other thing about Mauritius, the way I look at it is that FM announced General Anti Avoidance Rule (GAAR) going into 2016 and pretty much what has been said although we haven’t again see the fineprint, he is saying that it will be implemented from 2016. That is a repetition of what he had already announced. As far as whether there are any specific wrinkles there that we have to see the fine print again. It will be slightly premature to get worried about it at this stage and as it is a repetition. Q: What would you expect to see on the growth parameter? We have got our GDP figure coming in at 5 pm today. Are people worried about growth? A: My sense is that by the time the next quarter GDP comes actually market will be looking out to whether the FY14 can be 6 percent. The fundamental thing for the FII side and some of the reasons for weakness that you are seeing today, and in the last few weeks is that in the last few weeks globally money coming into equity funds has slowed down compared to what was the momentum in the first six-eight weeks of the year. Secondly a huge amount of money has been taken out of the system by deals. The amount of money which is left for the secondary market is substantially lesser because FII money was the only net, coming into the market, retail part was negative, domestic institutional part was negative flow wise. So, part of that is reflecting in lack of support which is there in the market. As we go forward if there is any kind of stability which is seen in terms of inflation and some amount of rate relief and as some expert said, can the GDP growth in the next six months because of 40 percent increase in planned expenditure and whole lot of other things can be better than sub 5 percent and that is what can hold up the market.