New PN norms: Good for Dalal Street

The Stock market is likely to continue its upsurge on Friday after regulator Sebi cleared the confusion over participatory notes and reasserted its stance on easing front-door FII investments, analysts said.

The announcement made by Sebi chairman M Damodaran that new rules on Offshore Derivatives Instruments such as PNs have come into effect in-line with the proposals made last week has put to rest all the confusion over the whole issue and normalcy is set to return to the bourses, a broker said.

Besides, Damodaran's statement that FIIs would be given permanent registration now onwards rather than the earlier practice of renewing it every three years would also boost the sentiments of foreign investors, marketmen said.

Other than the PN issue, volatility in the past few days was also being stoked by the approaching settlement of current month's derivative contracts and the settlement getting over today also bodes well for an orderly market, they added.

"Markets are likely to take the Sebi announcement positively and today's rally in the markets showed that the Sebi's proposals on P-Notes have already been slightly discounted," domestic brokerage firm SMC Global's vice president Rajesh Jain said.

However, global markets are under pressure and the domestic markets could see some effect of this, he noted.

Foreign brokerage firm Jefferies and Company's Equity Research Managing Director Anindya Chatterjee said, "If the fast track FII registration procedure Sebi is talking about really materialises no great impact would be seen on the markets but if some of the P-Notes investors do not want to convert, it could create a slightly negative affect. Overall, no great impact is visible as of now."

Premium Investments' S P Tulsian said, "Markets will be positive on Friday as the SEBI proposals have already been discounted by the markets."

Analysts noted that SEBI's proposals on P-Notes have already been discounted, as vindicated by today's 258-point rally in the benchmark Sensex, and as there were no changes from the proposed measures, it would help retain the positive momentum.

The Sensex closed 257.98 points higher at 18,770.89 on Thursday after touching a high of 18,900.10 points on brisk buying by funds in blue-chips from metal, bank and capital good segments.