Foreign portfolio investors (FPIs) were the net buyers to the tune of Rs 16,459 crore in the domestic markets in the month of August, with majority of investment coming in the debt segment. In equities, they invested just Rs 2,082.94 crore while debt segment saw inflow of Rs 14,376.2 crore between August 2-31, depositories data showed.
The quantum of investment in the debt segment is highest in this calender year so far.
“The main reason for FPI buying debt is the rising spread between the bond yields in US and India. The US 10-year is below 1.30 per cent and the Indian 10-year has risen above 6.2 per cent. Also, the stability in INR has brought down the cost of hedging. Expectations regarding exchange rate also are favourable. At these high valuations in equity risk-reward favour debt,” said V K Vijayakumar, chief investment strategist at Geojit Financial Services.
For equities, he said “the momentum in the market and the fear of missing the momentum might have brought FPIs back to equity in August. The global scenario also turned favourable with the Fed sending a dovish message that the economy has a lot more ground to cover and rate hikes are far away”. —With PTI