Stock markets likely to benefit after SEBI relaxes rules for FPIs
Sebi on Wednesday eased the regulatory and compliance framework for foreign portfolio investors (FPI) in a bid to boost investments. (Image Source: Money Control)

Indian stock markets are expected to monitor global cues on Thursday, and the Securities and Exchange Board of India (SEBI) has relaxed norms for foreign investors.

Asian shares surged ahead on Thursday after Wall Street got a boost from robust retail data, while US policymakers as bonds were struggling to cut interest rates as quickly as the market seemed to be struggling.

MSCI’s most extensive index among Asia-Pacific stocks outside Japan rose by 0.1%, continuing the observed pattern of recent sessions.

On Wall Street, the Dow gained 0.93%, while the S&P 500 rose 0.82% and the Nasdaq rose 0.90%.

The minutes of the July meeting of the Federal Reserve showed that policymakers were firmly united in needing to cut interest rates but were indicated they were not on a predetermined path of more easing. While a “pair” of members of the Fed favored a deeper cut of the half-point, “serious” favored no change at all.

That reluctance did not seem to gel well with the market’s aggressive pricing for over 100 basis points of easing by the end of 2020.

Treasuries were sold in response, and two-year yields rose to 1.59% and away from last week’s low of 1.467%.

Hopes for US fiscal stimulus also got a knock when President Donald Trump changed course and said he was not looking at lowering payroll taxes. Much now depends on how dovish Fed Chair Jerome Powell wishes to be in his Jackson Hole talk on Friday.

Back home, the markets regulator Sebi on Wednesday eased regulatory and compliance structure for foreign portfolio investors (FPI) by broad-basing their classification, and simplifying their registration, entry, and know-your-customer (KYC) norms in a bid to boost investments.

In a different critical move, the Sebi eased buyback norms for noted firms that own non-banking financial companies (NBFCs) and housing economics companies (HFCs) subsidiaries. This move will free conglomerates from the restrictive debt-to-equity ratio (DER) norms determined on a consolidated basis for guiding buybacks.

Members of the Reserve bank of India’s Monetary Policy Committee at its rate discussion held on 7 August acknowledged that supporting growth will continue their top priority during inflation remaining stable within the following one year, according to the minutes of the meeting issued on Wednesday.

The dollar had previously bounced overnight, rising to 98.263 on a basket of currencies from a low of 97.948. It also touched 106.57 yen from a trough of 106.21. The euro edged back to $1.1089 from a top of $1.1107, not supported by a gloomy economic forecast from Germany’s finance ministry.

A range of production surveys from a host of nations are due later on Thursday and opportunity is they will show a further slowdown in economic activity, especially in Europe.

Also, due is moments from the European Central Bank’s last policy meeting, and markets are seeing for more detail on especially when and how aggressively it might ease policy.

In commodity businesses, spot gold was steady at $1,502.53. Oil prices firmed after US government data explained a drawdown in domestic crude stocks. Brent crude futures rose 25 cents to $60.55, while US crude gained 34 cents to $56.02 a barrel.

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