FIIs pump Rs 20k cr in debt mkt in May, best show in 29 months

Overseas investors have poured in a staggering Rs 19,772 crore ($3.35 billion) into the Indian debt market in May, the highest monthly inflow in about two and a half years, emboldened by hopes of economic recovery after Narendra-Modi led BJP stormed to power at the Centre.

The net inflow last month came after Foreign Institutional Investors (FIIs) had pulled out net amount of about Rs 9,200 crore in April.

According to market experts, FIIs have pumped in huge investments in the Indian debt market on hopes that the new government will take steps to revive the economy and a favourable interest rate scenario.

As per data compiled by capital markets regulator Sebi, FIIs were gross buyers of debt securities worth Rs 40,478 crore in May, while they sold bonds to the tune of Rs 20,706 crore during the same time. This translates to a net inflow of Rs 19,772 crore (USD 3.35 billion) for the month.

This was the highest monthly net inflow since December 2011, when FIIs had made a net investment of Rs 21,774 crore in the debt market.

"...We believe that interest rates in such an environment could remain stable with a marginally downward bias. The current 10 year government security benchmark which is trading at 8.6 per cent could gradually edge lower in the coming weeks creating potential capital gains for investors," said Lakshmi Iyer, Chief Investor Officer (Debt) Head Products, Kotak MF.

FIIs, who were net buyers in the debt market for four consecutive months, turned net sellers in April after they were restrained from investing in short-term securities like treasury bills.

The strong inflows in the recent months have taken the net investment by FIIs to Rs 47,000 crore (USD 7.4 billion) in Indian debt market so far this year.

"Strategically, we remain pretty comfortable with our bullish rates view and continue to look for opportunities to add to outright receive swaps or long bond positions," wrote Vivek Rajpal and Prashant Pande of Asia rates strategy team of financial services firm Nomura in a report.

Currently, there are over 1,700 registered FIIs in the country alongwith 6,450 sub-accounts.

EDITORIAL OF THE DAY

  • No ifs and buts, please, in India’s engagement with Iran

    Some foreign policy purveyors in this country have for long insisted that India does not leverage its civilisational connections as it should or is ca

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

Sarthak Raychaudhuri

vice-president, HR, Asia South Whirlpool of India

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

TODAY'S COLUMNS

Taslima Nasreen

Hate in the time of bhaijaan

A few days ago I went to watch Bajrangi Bhaijaan, ...

Purnendu Ghosh

Death reveals the true colours of life

Death is instantaneous but it comes progressively. Some say, death ...

Gautam Gupta

Our fashion schools need to notch it up

"Creativity is the key to success and primary education is ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture