All Infrastructure companies today had a happy day after long when the government of India today announced that the limit put on investment of FII’s in the long term corporate bonds had been raised for primarily infrastructure companies from $5 billion to a good level of $25 billion. These bonds need to be issued by infrastructure companies but the FII worth within this segment was limited to up to only Rs. 500 crores or $109 million.
The news turned the Nifty for infrastructure stocks bullish almost immediately after the announcement of the finance ministry to increase the investment band of FII’s and stock prices started taking an upside.
It had been observed that there was a 3 year lock in period and certain apprehensions with the understanding of the conditions of the residual maturity post five years that had been disrupting the confidence of the FII investors in the scheme.
The new proposal states that the FII’s can now access investments in the infra bonds for up to $5 billion for which the initial maturity has been fixed at 5 years and there could be a residual maturity of another one year for first timers.
The FII’s can trade amongst other buyers of the bonds but not sell them to the domestic investors while they are under the lock in period.
On the Nifty and the Sensex we saw stocks like ARSS Infrastructure booking almost 13.5% while IRB Infrastructure Developer booked a rise of 5%. Good rise was also seen in stocks like IVRCL, Jaiprakash Asso, Marg, Patel Engineering etc.
“Bell the Bull” sees the infrastructure booming with such thrust provided by the government.