Depositories revise FPI limits for stocks

Depositorieson Friday revised foreign portfolio investment (FPI) limits for stocks listed on domestic stock exchanges.

With this,FPI limitin some stocks has climbed up to 100 per cent,market sources said.

Besides, in some stocks FPI limits have been increased to their respective sectoral caps, they added.

Under Sebi norms,depositories monitor the foreign investment limits in listed Indian companies.

While the raising of FPI limits for stocks to respective sectoral caps by NSDL/CDSL is welcome, the current sentiments of FPI towards emerging market equities is not very conducive so as to attract flows just on the basis of this relaxation by depositories, saidDeepak Jasani, Head Retail Research, HDFC Securities.

MSCI, on March 31,had said that itwill wait for the practical implementation of these changes and the systematic implementation of the new sectoral limits applicable to Indian securities before making any changes to the MSCI index.

It had said that it willprovide further communication on thisbefore June 30, 2020.

Hence funds that do not follow MSCI Indexes, and are willing to bet more on India under the current circumstances, will be able to invest more in select Indian stocks based on relaxed limits, Jasani said.

However, funds that follow MSCI Indexes would have to wait till at leastJune 30or once the Ministry of Finance notifies these fresh limits after companies have been given time, beyond the original March 31, 2020, to restrict their FPI limits to a lower threshold, he added.