MFs upbeat on move to enable FDI fund flow

The budget also proposes to raise the FII limit for investment in corporate bonds to enhance the flow of funds to the infrastructure sector with residual maturity over 5 years from the present $20 billion to $25 billion.  With this, the total limit available to FIIs for investment in corporate bonds aggregate at $40 billion.

Postive call

Madhu Kela, Chief Investment Strategist at Reliance Capital says foreign investment in equity mutual funds is a positive call for the market. “We will have to see details of FII investment into MFs,” says he and also expects to see funds flowing into mutual funds in the coming 12-36 months.

“The one very positive announcement, which I heard is that foreign nationals will be allowed to invest into equity mutual funds of India. This is a really big one from a market perspective,” adds Kelia.

L&T Mutual Fund CEO Sanjay Sinha says: “That’s hugely positive, because we have a fear that FII flows might get redirected out of India. We have seen FII outflow because foreign fund managers are rebalancing foreign market and emerging markets portfolios...and India, despite being attractive, being a part of emerging markets has had to suffer. Now you have an option for foreign investor so that he can choose to be invested in India, even though he may reduce his positions in the emerging markets in a basket. It is also positive for India’s capital market.” Reliance Mutual Fund CEO Sandeep Sikka says: “This will lead to more capital coming to India. But we have to understand the fine print, like what are the nitty gritties of that... definitely, it will lead to money flow coming into India and it is good for Indian capital markets.”

Big opportunity

UTI Mutual Fund Chief Marketing officer Jaideep Bhattacharya says: “I think it opens up a big opportunity for the global citizens to participate in emerging markets and take advantage of the India growth story. India and China are on the radar of a large number of people outside, and with this I think India will be able to attract sizeable amount of money from all over the world.”

IDBI Federal Life Insurance CIO Aneesh Srivastava says: “Implementation of GST and DTC are more-or-less in line with expectations. Significantly, now foreign residents can now invest in Indian mutual funds and it’s a very good development for the mutual fund industry, as earlier they would take the FII route.”

More funds

Principal AMC CIO Rajat Jain on allowing foreign investors to invest in equity funds avers:  “It will be positive in the sense that they can come directly into Indian markets rather than through ETFs.”

On enhancing investment limits for FIIs in corporate bonds, he feels, “It’s definitely a positive move in the sense that it gives you access to long-term funds.”

SBI Mutual Fund CIO Navneet Munot says: “The budget can be termed as growth oriented and has taken incremental measures to boost investment into housing, infrastructure and social sector. Quantum increase in limit for FII investment in infrastructure bonds and allowing foreign investors to invest in domestic mutual funds are bold moves towards liberalizing the capital account.”