FIIs invest record $6.11 billion in October

New Delhi: Showing their faith on the Indian economy, overseas funds infused a whopping $6.11 billion in October, the highest amount brought in any single month by foreign institutional investors (FIIs) since they were allowed for investment in local stocks, reports PTI.

With an investment of $6.11 billion in just 25 days in October, the total inflows of FIIs so far in 2010 has crossed $24.48 billion-mark that is also a record investment came in a single calendar year.

According to the country's top fund house — Reliance Mutual Fund — this fund inflows into India is likely to go up further in the coming days, as FIIs see better growth opportunities here compared to the other markets.

"FIIs see better rate of returns in emerging markets and India is set to attract disproportionate share of inflows," Reliance Mutual Fund's head of equities Sunil Singhania said.

As per data available with the capital market regulator Securities and Exchange Board of India (SEBI), inflows came in the current month has surpassed the record monthly investment of $5.89 billion (Rs23,872 crore) made in July, 2007.

According to Mr Singhania India received over 40% of FII inflows into emerging market equities in the current year, as they have strong faith in resilient domestic economy.

"India took 60 years to get to its first $1 trillion GDP in FY'08, but the move to $2 trillion GDP would be in the next 5-6 years, similar to that of China," he said.

"Due to the huge consumption and savings/investment boom, $2 trillion gross domestic product (GDP) is not a destination, but a milestone in India's ongoing journey towards $4 trillion GDP in the subsequent 5-7 years, and so on," Mr Singhania added.

In October only, foreign investment in the Indian stock market crossed the magic Rs1 trillion-mark ($22 billion) for the first time in history.

The sharp rise in FII flows to Indian stocks has pushed up the market. The BSE benchmark Sensex has risen over 15% so far this year and last month the index re-gained the magical 20,000 level after a gap of two and half years.

"Significant FII money will flow into the BRIC (Brazil, Russia, India and China) markets and India will get its share of investments," he said.

Worth to mention, the recently concluded Rs15,000 crore mega Coal India public offer attracted a whopping inflow of about Rs1.2 lakh crore from FIIs, more than the record Rs1.11 lakh crore they have invested in Indian stocks so far this year.


Hire local talent to mitigate outsourcing fears: Murthy

Bangalore: India will have to recruit local people at the front-end of its operations to mitigate the discomfort and outsourcing fears, reports PTI quoting Infosys mentor N R Narayana Murthy.

"We have to make sure we are not very visible in those markets", he said when asked about a possible solution over IT outsourcing concerns faced by Indian companies.

He said there was "bound to be discomfort by any government" if a large percentage of the workforce was of Indian origin. He cited the example of the Indian government's discomfort when China sent people to erect power plants in India.

"The solution for us is to make the front-end local, then no one will raise any objection", he said citing the example of China. "Why isn't there uproar against China", he countered, "China exports $1.1 trillion. Ours is a piddling $50 billion. Ours is nothing compared to China."

He said the damage done to lower level employment opportunities in the West was because of China's extraordinary performance in exports, but nobody was talking about it because they were not visible.

"The moral of the story is to make sure we are not very visible in those markets," he said.

"Hire local talent. Hire Englishmen in England, hire Americans in US and the Brazilian in Brazil", he said.

Mr Murthy was addressing a seminar of the All India Management Association (AIMA) titled ‘Knowledge Summit: India - Knowledge and Professional Services to the World - The Next Decade’.


SEBI clears IPO norms for insurance companies

Mumbai: The Securities and Exchange Board of India (SEBI) has approved disclosures and accounting requirements for initial public offers (IPOs) by insurance companies, clearing the deck for these companies to go public.

"The Board noted that the SEBI Issue of Capital Disclosure Requirements Regulations 2009 which is sector neutral would also apply to insurance companies. The board also noted and approved recommendations of the SEBI Committee on Disclosures and Accounting Standards (SCODA)...," C B Bhave, chairman of SEBI, announced yesterday.

The insurers would be required to disclose the risk factors specific to companies and also give an overview of the insurance industry under a broad heading. As per the draft guidelines compiled by the Insurance Regulatory and Development Authority (IRDA), only insurance companies which have been in operation for 10 years would be eligible to come out with IPOs, PTI reports.

Under existing IPO guidelines by SEBI, a company intending to float a public issue of shares must have a three-year track record of profit. "We do not have one set of guidelines for one sector and another set for another industry. The SCODA panel has discussed the proposals by IRDA and suggested the norms," Mr Bhave said. As of today, most insurance companies have yet to reach the break-even point and thus may not be eligible to have an IPO under the norms.

Several private sector insurers, including Reliance Life and HDFC Standard Life, have already shown interest in tapping the capital market to augment their resource base. Though HDFC Standard Life has completed 10 years of operations, Reliance Life has not.

"We have also approved amendments to the SEBI Issue of Capital Disclosure Requirements Regulations, which relates to exemption from appointment of a monitoring agency in case of insurance companies. A similar exemption exists for the banking sector and the disclosures will have a disclaimer clause by the IRDA in the offer document, similar to the disclaimer by the Reserve Bank of India in banking cases," Mr Bhave said.

According to the disclosure norms in the offer document mandated by SEBI, insurers would have to come up with disclosure of risk factors specific to companies. Also, the offer document would have a glossary of terms used in the insurance sector.

Currently, most of the 22 private life insurers and 17 non-life players have foreign partners. The Insurance Act caps foreign direct investment at 26%.


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