India Opens Stock Market to Foreign Investors as Its Economy Slows

Posted January 2nd, 2012 at 6:55 pm (UTC-5)
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On January 15, India opens its stock markets for the first time to individual foreign investors who will be able to directly buy and sell Indian equities.

Until now, foreign investors could only invest through mutual funds or institutional investors.

New Delhi expressed hope that the move will attract more foreign funds, and reduce market volatility, as well as reverse last year's trend that saw foreign investors pulling out billions of dollars from the Indian economy.

But many economists say the move is not likely to have an immediate impact when the allure of Indian stock markets has faded amid a faltering economy. They say India's economic growth for 2011 will not reach the nine per cent level the government had forecast.

The European debt crisis and sluggish Western economies are blamed for the drop in outside investors, but domestic factors also have played a role. India has been dealing with a series of interest rate hikes, rising inflation and a weakening national currency.