On the eve of the finance ministers visit to the city scheduled for today, Business Standard spoke to representatives of some of the leading brokerages of the country to ascertain the underlying sentiments.
Says Sanjiv Sanghvi, chief dealer, James Capel B&K: The depository is going to have a positive impact on the markets in the long run.
However, in the short term it is unlikely to bring in any buying support from the foreign institutions.
Leading stockbrokers feel that the FIIs, who would be the principal beneficiaries in a paperless system, are unlikely to allocate any fresh funds immediately after the depository is set up.
Vijay Pandya of Classic Shares & Stockbroking commented that certain FII funds would come in, however, the asset allocation would not be immediate.
The confidence of FIIs will also increase and perhaps those FIIs who were earlier skeptical about investing in the Indian markets because of settlement related problems, would now increase their exposure, he added.
The broking community, while welcoming the setting up of the depository as a step in the right direction, warned that any euphoria about a possible boom would be shortlived.
As a leading broker commented, A functional depository will be at best a secondary factor in improving the sentiments because it is essentially a system of settlement.
Representatives from other leading brokerages feel that the markets would improve only when the present political uncertainty at the Centre blows over, and liquidity comes back into the system.
Brokers say a crucial area which has to be looked into is the number of stocks in the depository and also the number of participants
According to James Mark of the stockbroking arm of Jardine Fleming, initially the depository stocks will be thinly traded and the entire dematerialisation will take time.
