Covid impact: Sebi may give overseas roadshow a miss, again

The Securities and Exchange Board of India (Sebi) is unlikely to embark on any overseas roadshows this year to meet foreign portfolio investors (FPIs) in the backdrop of the surge in coronavirus variants that has made it difficult to resume normal life in several countries.

The regulator typically meets overseas investors in the US and UK in the first half of a financial year, and had opted for a virtual meet last year too. 

"Given that there are still restrictions in several countries on how many people can come together, Sebi might find it more prudent to address the investors virtually," said a person familiar with the matter.

Europe, for instance, is using longer, stricter lockdowns to fight coronavirus variants, according to reports.

Regulations pertaining to foreign investment in instruments such as Reits and Invits could be one of the focal points of discussion this year, the person said. Tweaks in regulations on the debt side is also likely to be discussed.

FPIs have put in $23.2 billion into Indian equities in 2020 and another $6 billion this year. The pro-growth Union Budget, which guided for a 28 per cent increase in government expenditure, balanced by divestment and monetization of public sector enterprises, coupled with easy liquidity globally led FPIs to increase purchases in the last few weeks. 

"We look for earnings per share to grow on average over 25 per cent over the next 3 years. It would be unprecedented for the stock market to fall in an environment of such strong growth. We change our stance on India from market-weight to overweight and see 15 per cent upside from current levels with a Sensex price target of 58,450," foreign brokerage Julius Baer said in a recent note.

The brokerage has cautioned that the earnings recovery forecast by analysts needs to be sustained, in order to justify current market levels.

India has had a hard time in attracting investments in debt, however. FPIs have pulled out $13.8 billion and $2.2 billion from the debt market in 2020 and 2021, respectively.

"We are doing all we can to attract FPI investment into debt, especially considering India's fiscal deficit situation. The government has been liberalising foreign investment route in debt over the last few years, and Sebi will try to hardsell India debt to foreign investors," said another person who deals with FPIs.

Last year, for instance, the Reserve Bank of India (RBI) introduced a separate channel, namely ‘Fully Accessible Route’ (FAR), to enable non-residents to invest in specified government bonds. Under this route, eligible investors can invest in specified government securities without being subject to any investment ceilings.

"The government has embarked on pro-growth fiscal policies, which may lead to a faster and prolonged economic recovery if executed well. While the all-round optimism is warranted, especially after the Union Budget, the economy needs support from the RBI in absorbing the massive borrowing program by the government to control yields and avoid an adverse impact on rate-sensitive sectors," said brokerage Credit Suisse.