G-sec limits are put up for auctions for FPIs whenever some part of the allocation or quota gets freed due to redemption or sales
Foreign portfolio investors (FPIs) put in bids worth Rs 7,093 crore for government bonds, against an available limit of Rs 3,476 crore at Monday’s auction, an indication that they remain bullish on gilts.
At the previous auction, FPIs had put in bids worth Rs 7,396 crore against an available limit of Rs 14,285 crore. The interest this time, however, has waned somewhat with the cut-off bid to acquire the limits on G-secs coming down to 30 basis points, compared with 44.05 bps seen during the previous auction held on January 04.
The highest bid has also fallen to 50.10 bps from last time’s 82 bps, while the number of bidders reducing to 53 from 60.
Foreign investors have been net sellers of Indian debt over the last few days with FPIs selling $353.67 million in the last seven sessions.
It is noteworthy that global turmoil has led to sell-offs in many emerging markets (EM) while taking a toll on some of the EM currencies as well.
G-sec limits are put up for auctions for FPIs whenever some part of the allocation or quota gets freed due to redemption or sales. Currently, FPIs across all categories can invest up to R1.35 lakh crore in gilts.
Despite this, India has been in a relatively better position compared to some of its peers which is evident from Monday’s auction results. G-secs are considered attractive instruments by foreign investors given that it is a combination of attractive yields backed by a stable currency.
On Monday, the rupee closed 21 paise down at 67.83 to the dollar after having made some gains on Friday. The ten-year benchmark yield rose three basis points to close at 7.80%.