The Hindu Business Line : ‘P-Note policy may cool markets in short term’

New Delhi, Oct. 25 The new P-Note policy of the Securities and Exchange Board of India (SEBI) may result in some cooling-off in the stock markets in the short term, according to experts in the financial services industry.

But investment flows into the markets are expected to be buoyant in the medium to long term, they said.

“In the short term, there will be some cooling-off on account of these reforms (taken by SEBI). This would be a healthy trend. But investment flows would continue as a lot of funds are chasing good quality assets and Indian assets give better returns than most other markets,” Mr Ashvin Parekh, National Leader-Financial Services, Ernst & Young, told Business Line in his reactions to the P-Note policy.

Referring to the SEBI move on pension funds, charities and endowments, he highlighted that SEBI has signalled that all genuine investors would be allowed to participate in the Indian capital market.

In the long run

Meanwhile, Mr Punit Shah, Executive Director, PricewaterhouseCoopers (PwC), said that SEBI’s measures would have a huge adverse impact on the stock markets in the short term. “There is no change as compared to the draft. There was some expectations that the draft proposals would be somewhat eased when being finalised. That has not happened. In the short term, there would be adverse impact. But in the medium and long term, the investment flow would pick up on account of the strong fundamentals of the Indian economy,” he said.