High volatility in the equity market has shifted investor’s focus on debt instruments. Due to equity market mayhem, investors are now betting on safe instruments in debt markets. According to an Assocham survey released on Monday, investors are now more inclined to parking their surpluses in debt market and mutual funds rather than investing in equities. Investors pump in about Rs 1600 crore in debts market against Rs 1200 crore in equities by the third week of June 2008.
Lakshmi Iyer, vice-president and head, product, Kotak AMC, says: “There is an interim shift happening towards debt instruments. The awareness level is also growing on products like FMPs (fixed maturity plans) and liquid funds. Since the equity market has witnessed a major correction, it would also be a wise decision to park the money in debt instruments till the clear picture of the equity market comes out. Moreover, FMPs and liquid funds are also giving a decent return depending on their tenor of investment.”
The survey says investors are putting their money in corporate bonds, mainly in debentures issued by companies of good reputation. The debt market in India is becoming a fairly well segmented lot, which includes government securities, corporate bond market, PSU bonds, fixed deposits and other such similar savings instruments, the survey says.
“Same is the case with the mutual fund industry as investors are moving more towards balanced funds and fixed maturity plans offered by mutual fund houses as the equity markets are fraught with risk. Even the FIIs are betting on the debt market. As of December 2007, the outstanding FII investment in government securities and treasury bills was $326.64 million,” says the survey.
Akhilesh Singh, business head, Emkay Wealth, says: “In the last few months many investors have sold their portfolio and are sitting on cash. Instead of putting the money in plain vanilla kind of liquid fund, one should look at new products like fixed maturity plans.”