No correlation between FPI ownership norms and market fall: Sandeep Parekh

economictimes.indiatimes.com:

The market is abuzz that the market fall yesterday was due to selling by foreign portfolio investors (FPIs) to comply with Sebi's additional disclosure norms. Market regulator Securities and Exchange Board of India had in 2023 mandated FPIs holding more than 50% of their Indian equity AUM in a single Indian corporate group or holding more than Rs 25,000 crore of AUM in Indian markets to provide additional disclosures regarding their ownership. Sebi has now offered more time to offshore funds to liquidate their holdings.
Sandeep Parekh of Finsec Law Advisors, says “the FPI ownership norm directive is old news. This came in June 2023 and was supposed to be implemented from November 2023 and there is a 180-day period given to comply. So, yesterday's fall has absolutely nothing to do with this old circular. It has to do more to do with transparency. It is not restricting investments. This is just saying that if you are kind of investing large sums in a single group of companies, you come out and tell us who you are.”

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Do you think the stringent disclosure norms are going to act as an entry barrier for future FII-FPI participation?
Sandeep Parekh: I do not think correlation is the cause of the market fall. This is like very old news. This came in June, it was supposed to be implemented from November 2023 and there is a 180-day period given to comply. So, yesterday's fall has absolutely nothing to do with this old circular. It has to do more to do with transparency.

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