The government has loosened the foreign exchange purse string further. Resident Indians can now spend/invest up to $200,000 a year abroad. This includes buying stocks on foreign bourses and also real estate properties. This action is a clear indication that the government wants to curb the rise of rupee against dollar.
This means that a resident Indian family of 4 adults can invest $800,000 annually for acquiring stocks/property abroad. This is equivalent to over Rs.3 crore, a decent sum to buy a villa somewhere in Europe or perhaps even in US.
While buying property may seem okay, buying stocks abroad may not be a good idea because at the moment the foreign funds are rushing in to buy Indian stocks. The high-voltage bull-run here is because of that.
If you watch what analysts are saying you’ll find all of them are bullish over the long term. Some say that even at 17K+ one can go for selective buying and make profit provided he is willing to sit tight for at least 1-2 years.
In the meantime the government appears to be veering toward capital account convertibility soon on the face of strong surge of capital inflows. What will that mean is anybody’s guess because it hasn’t happened in the country anytime before.
These are therefore the signs of the things to come. The country at last looks all set to embrace high growth in the future, the volume of which will grow with each passing year.
The language of capital will become prevalent in the Indian landscape, and in the process such roadblocks like disallowing retail biggies are expected to gently but surely fall by the wayside.
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