FPIs investment in debt market hits 2-yr high at Rs 12,400 crore in Nov

Foreign Portfolio Investors (FPIs) have infused about Rs 12,400 crore into the Indian debt markets in November so far, making it the highest inflow in more than two years, on attractive yields offered by the country's debt. The inclusion of Indian G-Sec in the JP Morgan Government Bond Index Emerging Markets has spurred foreign fund participation in the Indian bond markets, market experts said.

FPIs have been bullish on Indian debt since the beginning of 2023 and have invested throughout the year, except March, when they had pulled out Rs 2,505 crore, data with the depositories showed.

With the latest inflow, the net investment by FPIs into debt reached Rs 47,900 crore so far this calendar year.

According to the data, overseas investors put in a net amount of Rs 12,400 crore into the debt market this month (till November 27). This was the highest inflow since September 2021, when they had poured Rs 12,804 crore.

This came following a net investment of Rs 6,382 crore in October.

Indian debt is relatively attractive compared to debt in other emerging markets, and it offers a relatively high yield compared to debt in developed markets, Bhuvan Rustagi, COO and Co-Founder, of Per Annum and Lendbox, said.

Apart from equities, FPIs pumped in a net amount of Rs 378 crore in the equity markets during the period under review.

This came after FPIs dumped equities worth Rs 24,548 crore in October and Rs 14,767 crore in September.

"The better-than-expected decline in inflation in the US around mid-October has given the market confidence to assume that the Fed is done with a rate hike. Consequently, the US bond yields have declined sharply with the 10-year benchmark bond yield correcting from 5 per cent in mid-October to 4.4 per cent now. This has forced the FPIs to slow down their selling," V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said.

Overall, the cumulative trend for 2023 remains healthy, with FPIs pouring in Rs 96,340 crore so far this calendar year.