FPIs poured Rs 1.5 trn into debt markets in 2017 due to higher bond yields

Overseas investors poured in a staggering Rs 1.5 lakh crore in the Indian debt markets in 2017 on the back of higher bond yields and stable currency, after pulling out massive funds in the preceding year. The overall net inflow has made 2017 as the best period for debt markets in terms of overseas investment since 2014.

Marketmen, however, believe that this kind of FPI flows may not continue this year as the withdrawal of liquidity and rate hikes in developed economies pick up. Also, the inflation cycle is likely to change following increase in commodity prices and recovery in consumption demand. According to latest data with depositories, Foreign Portfolio Investors (FPIs) bought net assets worth Rs 1.49 trillion into the debt markets in 2017.

This was in stark contrast to the pullout of Rs 43,645 seen in 2016. This investment instrument had received net inflow of 458.56 billion and Rs 1.6 trillion in 2015 and 2014, respectively. In comparison, foreign investors purchased equities to the tune of over Rs 510 billion last year.

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