The Hindu Business Line : Call for easing asset allocation norms

New Delhi, Jan 27 The Federation of Indian Chambers of Commerce and Industry and Ernst &Young have sought relaxation of asset allocation norms to help improve the financial depth of the capital market.

In a joint report, the two organisations have said that though retail investors have increased participation directly and through financial assets such as mutual funds, this group constitutes a small proportion in the market.

The report, ‘Capital Markets — sustaining growth and the challenges ahead’, also stresses on the need to ensure greater stability in the capital markets flow and stemming speculative flows. It expresses concern over the dependency of the equity markets on foreign portfolio flows which has led to increasing volatility in the market. Apart from a reduction in the cycle time in the primary market, the report also seeks increased focus on the debt market.

It cites political uncertainties, exchange rate pressure, interest rate and inflation, subprime crisis and the US economic slowdown as some of the major challenges facing the market regulator and capital market players.

“Some of the global challenges that India will need to manage in the near term is the fallout of subprime and its impact on the US economy, which is believed to be precipitating towards a slowdown,” it said. The report estimates that the impact of the slowdown may trickle down to Indian exports as well and could also lead to capital flight due to increased profit-booking and portfolio adjustment.

More Stories on : Industry Associations | Stock Markets

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Kalam asks varsities to offer job skills

A heady mix at Davos

Call to explore potential of dental research

Discoms’ troubles

Transportation issues may impact ONGC Tripura power project

Global carbon fund keen to finance CFL project plans here

Terrafirm to launch training division

Call for easing asset allocation norms

Science meet from today

Hariyali rural retail, now a Harvard case study

Sugar exports losing steam on rising domestic prices