scorecardresearchFPIs exit government bonds after delay in global index slot: Report

FPIs exit government bonds after delay in global index slot: Report

Updated: 02 Nov 2022, 11:28 AM IST
TL;DR.
For the overseas investors, sovereign bond market in India has always been less attractive than equities. We share more details
Overall, the FPIs hold  <span class='webrupee'>₹</span>1.25-lakh crore worth of government securities and paper. India has a $1-trillion sovereign debt market

Overall, the FPIs hold 1.25-lakh crore worth of government securities and paper. India has a $1-trillion sovereign debt market

Overseas funds stepped up sale of India’s sovereign bonds in October as India’s inclusion into the JPMorgan Emerging Market Bond Index could be delayed by a year, reported Business Line.

They sold government bonds worth nearly 2,500 crore to end a seven-month straight buying streak, data show.

For the FPIs, India’s sovereign bond market has always been less attractive than equities. But between April and September, FPIs had gone on a buying spree of India’s sovereign bonds on reports that JP Morgan was looking to include India in its emerging markets bond index.

This could have led to inflows worth $30-40 billion to the government bonds in the next few years. Foreign portfolio investors bought government bonds worth more than 5,000 crore in the six months starting April.

However, JP Morgan recently stated that it was still evaluating India’s inclusion. Overall, the FPIs hold 1.25-lakh crore worth of government securities and paper. India has a $1-trillion sovereign debt market.

“A bulk of this was just speculative money that moved in and out sensing a quick opportunity. FPI buying into government bonds was based on anticipation of JPMorgan’s inclusion of India into its bond index, which since did not happen, led to natural unwinding.

First Published: 02 Nov 2022, 11:28 AM IST