Hedge Funds

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With the Indian economy growing at 9% and the inbuilt sound stability in the financial system, investors from foreign shores are queuing to be a part of the Indian success story. Hedge funds are no exception and they are estimated to be investing in large amounts through the Foreign Institutional Investments route. The regulators like RBI and SEBI have taken a precautionary and watchful stand to the entry of these high leverage players which are known to add excessive volatility in the market. Thus far the participation of hedge funds has been fairly limited, largely because of the SEBI requirement to be registered for the use of Participatory-notes and the ceiling on the investment through the FII route

The paper starts off with a general tour on Hedge funds, the investment strategies employed by them, points of disparity with Mutual Funds, their emergence in India, the hedge funds functional in the country and the Impact on the Indian Capital Market. The study will highlight the strategies employed by the hedge funds, how they can be useful in the Indian context and what India needs to guard against.

The presentation tries to analyze the pros and cons of operation of hedge funds in