Stock market
The Indian stock market has been seeing continuous ups and downs for the last few months. Sometimes the reports of US President Trump’s tariff, sometimes the market is seen declining due to the possibility of tension between India and Pakistan. On Friday too, Dalal Street closed down 700 points. Meanwhile, a Bloomberg report claimed that India has increased the use of a special derivative instrument for foreign investors, making it easier for them to invest in India’s loan market of Rs 54 lakh crore. Is the Indian market on the trust of foreign investors? Let’s understand through the report.
According to the report, the financial regulator, which oversees special economic sector like Gift City, has allowed big international banks like HSBC and Standard Chartered to offer total returns swaps (TRS) related to corporate bonds. Earlier these swaps were only for government securities, but now their scope has also been increased by corporate loans. This step coincides with a boom in India’s loan market. Indian companies have issued bonds in a record quantity of local currency and the high-upper loan market of the private sector is also increasing rapidly. For example, the Shapoorji Palonji Group acquired a private loan of $ 3.4 billion this year, which is the biggest deal in the country so far.
What is the total return swap method
Total returns swap is a means through which foreign investors can invest in Indian assets without opening local accounts. In this system, investors acquire a return of an asset by paying a fee, without its real owner. According to Bloomberg, these swaps have become quite popular since India’s involvement in the global bond indices. Due to this, India’s sovereign date has investment of $ 22 billion.
Sachin Shah, managing director of Standard Chartered India, said that many global investors prefer to invest through TRS, and their gift city branch has seen a good increase in its demand. Currently, these swaps are only for the value of the price in the rupee, but the banks are also showing interest in starting them for the price -dated bonds in the dollar. Gift City Regulatory K.K. Rajaraman said that a counseling paper will be issued soon in this regard.