LTCG waiver... RBI, government have given all to investors they wanted, and they want 2 more benefits
Suspense Crime, Digital Desk : The expectations were that stock market would jump as RBI had the policy, it also had the government, both have given to the market what they wanted, but it was not a rise. Nifty 50 was seen at its high at 23516 on 5th June and finished at 23366, a decline. The government announced simultaneous incentives on taxation to the foreign investors, and sorted out all pending issues. The key amongst them being the announcement to scrap LTCG on FII investments into government securities (G-secs). The point is, then why are the investors reluctant to invest despite significant moves by RBI, government?
Why did it not accelerate
Under normal circumstances, these kinds of stimuli given by government for FIIs, FPIs, should be a positive catalyst but this time it was not. It is a significant message from market that whatever was in control of RBI, government have done that now, and the factor about which the RBI, government do not have any control is crude oil. The truth is it is not liquidity or demand, we have a supply side problem to deal with in economy, and what market doesn't want is rising energy prices to kill demand. At the same time, market doesn't want a depreciating rupee when we can't manage a positive global opinion for AI-trade, and for geo-political reasons.
Would foreign investors come back
RBI has removed tax barriers for foreign investors investing in bonds. And the questions remains whether foreign investors will start buying Indian bonds. There were many initiatives for investors to be able to buy sovereign bonds easily.
Limits on individual bonds under the normal route for FPI has been removed. The most important step for now has been the government resolution for a long pending issue on withholding tax on government bonds.
