As a New Year gift for stock markets, the Government of India has allowed Qualified Foreign Investors (QFIs), including overseas individuals, to invest directly in Indian stock markets.

Earlier, QFIs are permitted to invest in mutual fund schemes. Now this logical step taken by the Government is to widen the class of investors, attract more foreign funds, reduce market volatility and to deepen the Indian capital market, said in a statement by the Finance Ministry.

In order to trade, a QFI will have to open a trading account with a qualified depository participant, and all transactions have to be carried out through this route.