India has been facing a bearish run
in terms of foreign investment in its capital markets. The poorly performing
market has churned out astonishingly bad results in the past year. So much so
that it reportedly prompted a net outflow of almost USD 380 Million in foreign investment in 2011.
To overturn this dismal trend, the
Ministry of Finance, Government of India announced on January 1, 2012 in a press
release, that it had decided to allow Qualified Foreign Investors [‘’QFIs’]
to invest directly in the Indian equity market. This is a welcome initiative
that should go a long way in dispelling the gloom that has gripped the Sensex. This is the second measure taken in 2011 to
increase foreign activity in Indian capital markets. The first was in August
when QFIs were permitted direct access to Indian mutual fund schemes.