Mint Quick Edit | Sebi’s easing of market rules is nicely timed

4 months ago 7

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Though the Securities and Exchange Board of India (Sebi) has taken incremental steps, they could add up to offer India’s capital market support at a critical juncture. (Reuters)

Summary

From foreign inflows to public offers of equity and mutual fund investments, regulatory changes approved by the regulator mark a welcome shift in the market’s favour at a critical juncture.

The board-level decisions of the Securities and Exchange Board of India (Sebi) seem to have left no market constituency out. Apart from an easier inward path for foreign portfolio investors, mandates for initial public offerings (IPOs) have been eased and the time given to comply with minimum public float rules has been extended.

If this encourages share issuances by large companies, it would enhance the market’s supply of stocks. Anchor investors in IPOs have been defined more inclusively and their quota has been upped to 40%, which could give issuers more confidence.

Also, the mutual fund industry will benefit as the exit-load cap gets reduced to 3% from 5%, even as real estate investment trusts (REITs) are classified as equity for investments by mutual funds. A lower exit charge should reinforce the appeal of such funds even as REITs help diversify their equity portfolios.

Though these are incremental steps, they could add up to offer India’s capital market support at a critical juncture. Foreign interest in Indian stocks seems to have flagged in recent times and domestic flows may or may not hold up amid uncertainty. Eventually, however, it’s always business earnings that matter.

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