Trading volumes on SGX in sync with FII flows into the domestic market

Move to curb offshore trading of domestic indices could hurt foreign inflows into India

The measures taken by domestic bourses to put an end to offshore trading of domestic securities could dent foreign institutional investor (FII) flows into Indian capital markets. Historical data suggests a positive correlation between FII inflows in India and the volume of Nifty contracts traded on the Singapore Stock Exchange (SGX). High portfolio flows into Indian markets have been accompanied by an increase in trading volumes in Nifty contracts at the SGX.

Foreign portfolio investor (FPI) inflows into Indian equities rose sharply after the 2009 Lehman crisis, as the US central bank went on a money-pumping spree to avert a