Foreign Portfolio Investment (FPI) Limits Revised For All Listed Stocks
On Friday, depositories revised foreign portfolio investment (FPI) limits for stocks listed on domestic stock exchanges. With this, FPI limit in some stocks has climbed up to 100 percent, while in some stocks FPI limits have been increased to their respective sectoral caps, a PTI report said citing market sources.
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," said Deepak Jasani, Head Retail Research, HDFC Securities to PTI.
The change in FPI limit comes after MSCI's decision to defer changes to India's weightage in its global indices citing lack of implementation of the government decision to raise the statutory FPI limit in domestic companies from 24 percent to the respective sectoral foreign direct investment (FDI) limits. The FPI limit change to become effective on 1 April 2020.
The limits will be raised irreversibly raised unless companies' boards and shareholders passed resolutions restricting it.
On 31 March, MSCI, had said that it will 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 will provide further communication on this before 30 June 2020.
Funds that follow MSCI Indexes would have to wait till at least 30 June or once the Ministry of Finance notifies these fresh limits after companies have been given time, beyond the original 31 March 2020, to restrict their FPI limits to a lower threshold.