Investors should take the long view and invest on fundamentals because when the cycle turns, those with a short-term view end up stampeding to the exits, said Mark Austen, chief executive officer at Asia Securities Industry and Financial Markets Association (ASIFMA).
The comment came as Nifty touched a new record high, surpassing the crucial 10,000-points mark amid renewed economic optimism.
"Obviously, markets that are going up attract additional investors and those that pass milestones create more noise, which further attracts interest," he said in an exclusive interaction with ET. "And of course, a strong economy is an even larger driver and India is at the top of league tables."
With equities surging, many overseas investors are now convinced about the country's limited credit risk as "masala" bonds are gaining ground globally, offering higher rates with a stable currency. This should trigger a fresh bout of debt fund inflows from those investors, who were hesitant to bet on India.
"Masala bonds have helped increase attraction of Indian debt papers. It is high time the country's debt market becomes more liquid amid such global exuberance," said Austen, suggesting that investment norms for foreign portfolio investors should be relaxed.
For example, a foreign portfolio investor (FPI) is supposed to go through more than 28 pages of documents before it starts investing in India. This is in stark contrast to China where an FPI needs to go through just four pages of documents.
Masala bonds or rupee-denominated bonds are sold to overseas investors, who buy them outside India bearing the currency exchange risk unlike in dollar-denominated bonds.Naturally, these masala bonds offer a higher rates as compared to other offshore securities.
Source: economictimes.indiatimes.com