FPIs' net inflow at Rs 5,000 cr in debt market

New Delhi: Overseas investors have so far pumped in over Rs 5,000 crore in the country's debt market this month, helped by stable outlook for the rupee. However, in view of higher stock valuations amid surging markets, foreign portfolio investors (FPIs) invested only Rs 290 crore in equities during this period.

"FPI flows into Indian equities are muted as the market has run up in the past four months and valuations are no longer cheap. Having said this, we are seeing some flows coming back to equity market for past 2-3 days," Sharekhan Head Advisory Hemang Jani said.

"The differential spread between 10-year bond yields in the US and India is still around 4.5-5 per cent, this, coupled with stable outlook for the Indian currency bodes well for FPI flows into debt market," Jani added.

According to latest depository data, FPIs invested a net Rs 5,318 crore (USD 825 million) in debt markets during May 2 -12. This comes following a net inflow of over Rs 51,679 crore in the last three months (February-April) on several factors, including expectations that BJP's victory in recently held assembly polls will accelerate the pace of reforms.

Prior to that, such investors had pulled out over Rs 2,300 crore from debt markets in January. With the latest inflow, total investment in debt markets has crossed over Rs 54,000 crore this year.