Financial Times- India has pledged to open the “front door†wider to hedge funds in an apparent bid to bolster foreign investor confidence after a stock market plunge triggered by a proposedcrackdown on investment in the country through offshore derivatives.
Hedge funds will be given easier direct access to the Indian stock market after the proposed curbs that have raised fears of a rush of selling by foreign investors.
M Damodaran, the chairman of the Securities and Exchange Board of India, said the regulator had already registered some hedge funds as investors qualified to invest in the country.
He said Sebi was reviewing regulations to see if there were more types of funds that could meet the criteria for entry. “We are looking at the content to see if we can bring in a few more people that might not presently qualify,†Mr Damodaran said.
Sebi sparked the stock market plunge on Wednesday by announcing the proposed regulations that would curtail the sale of derivatives known as participatory notes that are used by foreign investors, particularly hedge funds, to gain exposure to underlying Indian shares. The market initially fell 9 per cent on the news amid speculation the measures would curb massive capital inflows into India’s market.
