Foreign portfolio investors (FPI) have sold more than a billion dollars of Indian debt in the last eight consecutive sessions.
Bloomberg data shows there was outflow of $1.023 billion in the previous eight consecutive sessions from the debt segment. On a month-to-date basis, FPIs remain net sellers of Indian debt at $987.20 million. Even on a year-to-date basis, they remain net sellers at $1.177 billion.
As Ananth Narayan, MD and regional head of financial markets, Asean and South Asia, Standard Chartered, points out, much of the FPI debt outflow appears to be in corporate bonds, which could simply be bonds maturing, and not being replaced with fresh investments.
“Having said that, as the last auction for FPI debt limits also indicates, FPI interest in India debt has waned the past few days. There are various factors that could explain this. There are doubts over returns from holding India paper, uncertainty in CPI outlook and the recent weakening of the rupee,” he added.
Narayan said global factors – possible Fed action in June or July, hardening of crude prices, etc. have also not helped either. “Given India’s debt is not part of key global bond benchmarks, nervousness on rupee holdings tends to be accentuated.” he pointed out.