SEBI changes P-notes norms: Removes ODI restriction

The news can come as a surprise bounce back to the markets tomorrow morning in India. SEBI officials met today evening in the hi firing turbulance in the global markets to decide the further course of action on the P notes or Participatory notes.

The outcome of the meeting appears to be fruitful, as the SEBI officials headed by Mr. Bhave said: CB Bhave, Chairman, Securities and Exchange Board of India (SEBI), said norms on participatory notes have been revised and the limit on overseas-derivative instruments (ODIs) in both cash and derivates will be removed. "The 40% cap on assets under custody in cash market will be removed".

As per the news, Around 1 year back, in October 2007, the Sebi had banned fresh issue of P-Notes by FIIs. This was done to check the significant flow of foreign funds into the Indian stock markets. The excess liquidity was difficult for the financial market regulators to handle.

What implications can this relaxation of P-notes norms and Removal of ODI restriction have of the markets?
Most probably, the markets should go up in the short term. Experts are of the view that this revision or relaxation can work wonders for the ailing stock markets, atleast in India.
No body knows what will happen tomorrow, but this would definitely send positive signal to the stock markets.