Foreign investors dump debt

By Morningstar Analysts |  26-02-19 | 
 

Last month, Financial Express noted that Foreign Portfolio Investors (FPIs) have pulled out nearly $11.3 billion from Indian debt and equity markets in 2018, the highest since 2008.

The outflows of $6.7 billion in 2018 from the debt markets were the result of rising yields and the falling rupee.

The latest post by Financial Express notes that overseas players pumped in Rs 2,039 crore into equities but sold debt securities worth Rs 1,949 crore in the month of February.

Morningstar’s Senior Analyst Himanshu Srivastava believes that the recent sell-off could be attributed to the increase in cross-border tensions between India and Pakistan: “For a long time, FPIs have been adopting a cautious stance towards India, and the recent developments would have further dampened sentiments.”

According to Srivastava, it is too early to predict the flow of investments as they are guided by short-term trends and become event specific. Besides cross-border tensions, another major focus area for the FPIs would be the outcome of the general elections and they have been adopting a wait-and-watch stance in anticipation of a concrete signs of economic growth.

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