FPIs turn net buyers of G-secs in December

After turning net sellers of government bonds under the fully accessible route (FAR) for the first time since India’s inclusion in the JP Morgan Global Market Index — Emerging Suite in November, foreign portfolio investors (FPIs) have again turned net buyers in December.

FPIs increased their positions held under the fully accessible route to Rs 2.51 lakh crore against Rs 2.43 lakh crore a month ago.

The appointment of the new governor of the Reserve Bank of India has boosted the expectations of a rate cut in February.

Also ReadIPOs in 2024: A look at the winners and losers

This prompted foreign investors to take a positive view on the government bond market despite the rupee being under pressure. The new RBI governor, Sanjay Malhotra, is perceived to be dovish in his approach, therefore, the market is confident about India going for a rate cut in February, said traders.

If the central bank does not go for a rate cut as expected, it may announce additional measures to infuse liquidity in the market, such as open market operations or buybacks.

These will in turn help yields on the government securities to ease. Moreover, end of supply of government bonds in February is also boosting the demand for the same.

Hence, the interest rate differential between safe-haven and emerging markets would narrow, making latter more appealing to the foreign investors.

However, the sharp depreciation in the rupee, driven by dollar strengthening, and surge in the US Treasury yields, prompted foreign investors to not take aggressive bets on the domestic bond market.

Another factor that has slowed down the pace of foreign flows in the government bond market is expectations of the rupee getting depreciated further. Since the domestic currency being overvalued by 8% vis-a-vis its Asian peers, apprehensions of it falling further has risen.

“Foreign investors are worried and apprehensive about the rupee depreciating further as dollar is expected to remain elevated. Therefore, they are not taking large or aggressive bets in the government bond market,” said a trader with a foreign bank.

Since September 17, when the US Federal Reserve cut the interest rate, the dollar has strengthened by 7%.

Consequently, the dollar index has risen from 105.44,

 » Read More

Related Articles

‘Pramerica Life targets Rs 3,000-crore GWP in FY26,’ Pankaj Gupta

Pramerica Life Insurance, a joint venture between subsidiaries of Piramal Capital and Housing Finance and US-based Prudential Financial Inc, aims to close FY26 with Rs 3,000 crore in gross written premium. In an interview with Narayanan V, managing director and CEO Pankaj Gupta discusses the products and distribution strategy. Excerpts: Life insurance premiums have been

Tata small cap fund: Targeting growth at reasonable valuations

Tata Small Cap Fund is a growth-oriented scheme in the Small Cap Fund category that has exhibited a noteworthy track record since its inception and has outpaced many of its prominent peers, thereby rewarding investors with superior risk-adjusted returns. Launched in November 2018, Tata Small Cap Fund aims to invest in stocks of companies that are in growth

‘We don’t have IPO on mind right now,’ says Abhinandan Lodha

Amidst the trademark dispute with his brother Abhishek Lodha, Abhinandan Lodha, founder and chairman, House of Abhinandan Lodha (HoABL) is looking to grow his plotted development business by 30% per annum and buy land in new cities. In an interview, Lodha tells Raghavendra Kamath about his strategy and outlook for the real estate market. How

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Stay Connected

0FansLike
0FollowersFollow
0SubscribersSubscribe
- Advertisement -

Latest Articles

‘Pramerica Life targets Rs 3,000-crore GWP in FY26,’ Pankaj Gupta

Pramerica Life Insurance, a joint venture between subsidiaries of Piramal Capital and Housing Finance and US-based Prudential Financial Inc, aims to close FY26 with Rs 3,000 crore in gross written premium. In an interview with Narayanan V, managing director and CEO Pankaj Gupta discusses the products and distribution strategy. Excerpts: Life insurance premiums have been

Tata small cap fund: Targeting growth at reasonable valuations

Tata Small Cap Fund is a growth-oriented scheme in the Small Cap Fund category that has exhibited a noteworthy track record since its inception and has outpaced many of its prominent peers, thereby rewarding investors with superior risk-adjusted returns. Launched in November 2018, Tata Small Cap Fund aims to invest in stocks of companies that are in growth

‘We don’t have IPO on mind right now,’ says Abhinandan Lodha

Amidst the trademark dispute with his brother Abhishek Lodha, Abhinandan Lodha, founder and chairman, House of Abhinandan Lodha (HoABL) is looking to grow his plotted development business by 30% per annum and buy land in new cities. In an interview, Lodha tells Raghavendra Kamath about his strategy and outlook for the real estate market. How

Stocks To Watch: From Tariff impact on auto to Reliance Industries, HDFC, Bharat Dynamic, here’s a list of over 10 stocks in news today

The stock market is buzzing with action today. Some companies are riding high on big deals and record profits, while others are facing fresh challenges. But the biggest shake-up? Donald Trump has kicked off his tariff agenda with sweeping trade barriers that could shake up global markets. On April 2, Trump declared “Liberation Day,” unveiling

Stock Market Live Updates: Trump tariffs trigger global sell off, Nasdaq Futures down 3.5%. GIFT Nifty down 350 points

Go to Live UpdatesSensex Nifty Today | Stock Market Live Updates: As global markets react to Donald Trump’s fresh tariff announcement, all eyes are on how Indian equities will open today. With key sectors like automobiles, pharmaceuticals, electronics, IT, and jewellery in focus, investors will be watching for early trends and market sentiment. Key things