Foreign institutional investors (FIIs) are not only betting big in the country’s equity market but have also started augmenting their exposure in Indian debt papers.
Ever since the US Fed rate cut in September, FIIs have been consistently buying Indian bonds. According to the Securities and Exchange Board of India (Sebi), FIIs have pumped in Rs 2,790.70 crore or around $ 689 million into the debt market in October alone. This is the highest infusion this financial year. It is 5% or nearly Rs 135 crore more than the entire Rs 2,655.80 crore or $652 million pumped in by FIIs in September.
?In future, contribution to the global GDP will be more from emerging markets like India,? said Anita Gandhi, head?institutional business, Arihant Capital Market. ?FIIs have identified this and are discounting in advance and increasing their exposure not only in the equity market but also in debt instruments,? she said.
She added that the recent gas find in India and the appreciating rupee against the greenback is yet another reason why FIIs are bullish on both the equity as well as debt markets.
Prajit Agrawal, head of fixed income, SBI mutual fund (SBI MF), said, ?FIIs see the currency rising significantly against the dollar. Hence they are hiking their exposure in the bond market to benefit from the appreciatiing rupee.?
April and May witnessed FII inflows to the tune of around Rs 1,042.30 crore and Rs 1,360.10 crore in the debt segment. But with the US sub-prime crisis in June and July, FIIs not only sold equities but also in the money market. In June, FIIs sold money market instruments to the tune of nearly Rs 542 crore and in July the figure was Rs 1,263 crore.