FDI hike in Railways to have limited impact on markets

The moot point is that FDI limits in railways have been hiked. When asked about a market perspective of whether this is a big move, or is this only a sentimental booster and not a material booster, Rajat Rajgarhia, MD-Institutional Equities, Motilal Oswal Securities talks about 100% FDI in railways.  He said “at the moment, this is going to go down more as a measure of intent, and not as a measure of material impact. These are areas where we will have to see what kind of projects will come up. We will also have to watch out for which companies from the international arena will look to enter these ventures under what terms and conditions.

So, the impact in these areas will be seen only over a long period of time. The more immediate measure that markets were looking forward to was FDI in insurance. But this definitely seems to be facing some roadblocks. The key test for the government now would be how soon they are able to pass the insurance FDI bill.

FDI would be good for railways and defence too, but I do not think this is a game-changing event for the markets right now”.