A bearish market led by doubts over Indias growth prospects has led the finance ministry to take a rather bold step over the weekend. New Delhi announced that individual overseas investors can now put cash directly into Indian stocks. Qualified foreign investors, or QFIs, will now be able to invest individually up to 5 percent of the capital of the Indian company. Cumulatively, QFIs can invest up to 10 percent of the capital of the company being invested in, the government said in a statement.The move is expected to attract more foreign capital into India’s sagging equity markets and reduce market turbulence. The decision will come into effect on January 15, 2012. Previously, only foreign institutional investors and non-resident Indians were allowed to directly invest in local shares, leaving foreign individuals limited to investing in the country’s stock markets indirectly through mutual funds. The government has also eased foreign investment rules in local debt, allowing more foreign capital to flow into its sovereign bonds.
Growth in the September quarter slipped to a two-year low of 6.9 percent and industrial production fell 5.1 percent in October, its first contraction since June 2009, inflation hit a high of 9.11 percent, while the rupee slid to a record low against the U.S. dollar at Rs 54 / $.