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India Halts Gold ETF Bulk Buys Ahead of Festivals
16 Oct
Summary
- Major Indian mutual funds suspended bulk gold ETF subscriptions.
- The move follows a nudge from the Securities and Exchange Board of India.
- Halt occurs just before the festive season's typical surge in investor demand.
In a significant development, major Indian mutual funds have suspended bulk subscriptions to gold exchange-traded funds (ETFs). Notices were issued late on Thursday by prominent houses like Kotak Mahindra Mutual Fund, UTI Mutual Fund, and HDFC Mutual Fund.
This decisive action reportedly follows a nudge from the Securities and Exchange Board of India (SEBI). Industry sources confirm discussions with the market regulator preceded this halt, though SEBI has not yet commented.
The timing is particularly noteworthy, occurring just before India's festive season, traditionally a period of increased gold demand. Historically, gold and silver ETF inflows have surged during this time, especially when stock market returns are lackluster.
This suspension is seen as a precautionary measure, possibly to manage potential import surges and their impact on the rupee and trade deficit. Gold imports have seen a recent decline, but festival-season buying is a strong tradition in India.
