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Perceptions spreading negative sentiment; fundamentals still strong: UK Sinha

In an interview to NDTV Profit, Jamal Mecklai, CEO of Mecklai Financial, speaks about how the currency market is going to perform ahead.

An A320 plane under construction in China.
An A320 plane under construction in China.

Perceptions are playing a major role in spreading negativity in the Indian equity markets, equity markets regulator UK Sinha told NDTV in an interview over the weekend.


“There is not only gloom but also a lot of hope in the markets, we have to try and get the 'good moves' into the limelight,” Sinha said in the Walk The Talk show hosted by Indian Express Editor-in-Chief Shekhar Gupta.


Saying that the fundamentals of the Indian economy are still very attractive, he added that investors are seeing the current valuations as attractive.


“India proving a very good opportunity for foreign investors,” he told NDTV, pointing out that other BRIC (Brazil, Russia, India and China) nations’ performance is not better than India’s.


“Global factors playing their part in the stock market downturn,” he said.


In hindsight, he said, the rollback of the stimulus that followed the global financial crisis was slow.


The newly-formulated General Anti-Avoidance Rules has been an issue with foreign institutional investors (FIIs), Sinha conceded.


“FIIs initially had very strong doubts and suspicion on the GAAR issue, (now) the areas of discordance on GAAR with FIIs not so wide anymore,” he said.


“FIIs have to take up the GAAR issues with the government, Sinha told NDTV, adding that the government is willing to consider legitimate points raised by FIIs. “We want FIIs to stay invested in India.”


Last week, Mauritian foreign minister Arvin Boolell told NDTV that India's proposals to bring domestic laws like GAAR had led to tremendous concern and uncertainty and will impact foreign investments into India.


General Anti-Avoidance Rules or GAAR, which was announced in the Union Budget, aims to target tax evaders, partly by stopping Indian companies and investors from routing investments through Mauritius or other tax havens for the sole purpose of avoiding taxes.


Mr Boolell stressed that Mauritius has been co-operating with India.


"Mauritius gave details on Vodafone in less than 7 days," he said.


According to estimates released in May, Indian markets have lost $10 billion worth investments from the overseas funds and ultra-rich foreign individuals over a period of little more than one month on taxation worries.


These investors, who mostly invest through P-Notes (participatory notes) in the Indian markets have either pared their exposure to the Indian securities or have deferred their investments ever since India proposed GAAR late in March 2012.


Also late in June, the Prime Minister’s Office clarified that GAAR would be implemented starting April 2013, and that it would shortly come out with a explanatory draft on the rules.