Allowing foreign nationals direct access to India's stock market will reduce volatility, a finance ministry official said on Monday, a day after the government announced plans to open equity markets to individual foreign investors. Thomas Mathew, joint secretary for capital markets, said India expected to attract stable long-term investment with the rule change. "Retail investors are always, historically throughout the world, longer-term players," he told reporters.
Previously, foreign nationals were limited to investing in India's equity markets through indirect routes such as mutual funds, or through institutional vehicles.