Do we want to give them more freedom to speculate in the Indian market? It is also pertinent to note that US Supreme Court last week shot down an attempt by the Securities Exchange Commission to regulate hedge funds. This makes a mockery of Sebi’s rule that FII sub-accounts must be entities that are regulated in their home jurisdiction.

Having obtained board clearance to allow short-selling by institutions, Sebi will do well not to hurry up with its implementation when the market is so turbulent. What was necessary and would have worked well in the roaring Bull phase may prove to be an embarrassment in a volatile market, especially since Sebi has still to get a handle on beneficial ownership of a big chunk of market participants.

suchetadalal@yahoo.comThe Indian capital market seems set for some turbulent times. Every time the Bull run shows signs of a revival, there is negative news that causes prices to dive again; clearly even the expectation that good corporate results for the recent quarter will lift indices will be tempered by recent political developments.

On Friday, rumours about the Prime Minister’s resignation sent prices tumbling. Although the Congress Party issued quick denials, there seems to have been some fire beneath that smoke. The party leadership will do well not to push the mild-mannered Prime Minister too far; a person who is scrupulously honest has little incentive to hang on to a chair when political expediency dictates decisions and he takes all the blame.

If foreign investors and portfolio funds have learnt to show enormous patience in dealing with the slow pace of India’s economic reforms, marked by frequent rollback of key decisions, it owes a lot to the faith they have in the leadership of an economist and a reformer. The world recognises that it is difficult to push reforms with a coalition government in a democratic nation with an obdurate bureaucracy (ask Jim Rogers) and a high level of corruption.

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