Foreign Institutional Investors (FII) have been net sellers in the debt market in the first two days of this week, for the first time in 2015.
FIIs sold a net $200.65 million on Monday and Tuesday. FIIs have, since January, pumped in $5.8 billion into the Indian debt market. The figure had crossed $6 billion in the first week of March but sell-offs seen in the last two days have erased the gains.
A bond arranger who did not wish to be named attributed the sales to bulk redemptions of short-term commercial paper. “I do not think FIIs have sold any Indian paper exclusively due to expectations of an early rate hike led by a positive US jobs data,” said the source.
On Friday, the US Labor Department had posted a stronger-than-expected non-farm payroll data which indicated that unemployment had hit six-and-a-half-year low at 5.5%. This had sparked caution among investors leading to a sell-off in the emerging market assets — both in equities and bonds. The market is awaiting clarity on the US interest rate stance, which is likely to emerge after the Federal Open Market Committee (FOMC) meet mid-March.