Skip to main content

FOREIGN Institutional Investors (FIIs) shift assets from equity to infra bonds

 
 
FOREIGN Institutional Investors (FIIs) may be net sellers in the domestic equity market, but they have not yet lost faith in the world's most populous democracy yet. These big investors have simply shifted focus to the country's debt market.

In October and November, FIIs invested Rs 5,540 crore or over $1 billion in long-term infrastructure debt instruments of companies, which have a oneyear lock-in and a residual maturity exceeding one year, new data put out by the capital markets regulator Sebi showed.

Attractive yields in India and expectations of a drop in interest rates, which would lead to capital appreciation on higher coupon bonds, are driving these savvy investors to the bond street. The Union government had revised the modalities for FII investment in this category of debt instruments in September by reducing the lock-in period to one year with one-year residual maturity.

FIIs have been allowed to invest up to $5 billion (Rs 26,951 crore) out of the total limit of $25 billion in long-term corporate infra bonds in India.

Earlier, FII investment in long-term corporate infrastructure bonds had a minimum lock-in period of three years, though FIIs were allowed to trade among themselves during the lock-in period. However, the investments could be sold to domestic investors during this period.

Over the past two months, some clarity has emerged on the inflation front and also the fact that growth is falling, which has led the market to believe that monetary cycle reversal is round the corner. This effectively makes the debt instruments attractive.

The reduction of the lock-in period to a third kick started activity in the bond market. October and November saw FIIs invest Rs 2,095 and Rs 3,445 crore in corporate debt long-term infra bonds with one-year lock-in and oneyear residual maturity. In contrast till September 30, FII investment in corporate long-term infra bonds with three-year lock-in and with three-year residual maturity had by and large remained unutilised.

The total FII limit in such corporate bonds is Rs 22,419 crore. This means a limit of Rs 16,879 crore is still available for FII investments in such bonds. However, analysts are not sure if the remaining investment limit in long-term corporate infra bonds will receive equally strong FII response given the macro-economic conditions globally, which has triggered to a flight to safety.

The situation outside is not great. It needs to be seen what kind of institution and sector FIIs are investing in. The investment might be going to project specific debt or it could be private equity investments through structured products, which may later be converted into equity. Sebi monthly data on FIIs' debt investment showed that they have almost exhausted the limit set for such investments in Indian gilts. As of November 30, FII investment limit in government debt of Rs 43,650 crore was almost exhausted with just Rs 651 crore additional limit available.

As per Sebi data, FIIs have invested Rs 39,607 crore in the debt segment so far in 2011 while they have been net-sellers to the extent of Rs 2,969 crore in the equity segment.
 

---------------------------------------------

 

Application form for Applying for Tax Saving Long Term Infrastructure Bond  

 

Current open Long Term Infra Bond Application form

 

 

Submit filled up application    Collection canter near you

 

 

---------------------------------------------

Buy Tax Saving Mutual Funds Online by selecting the Mutual Fund Schemes

Mutual Funds Online

 

Download Tax Saving Mutual Fund Applications / Forms from all AMCs:

Download Mutual Fund Applications

 

Popular posts from this blog

ULIP Review: ProGrowth Super II

  If you are interested in a death cover that's just big enough, HDFC SL ProGrowth Super II is something worth a try. The beauty is it has something for everybody — you name the risk profile, the category is right up there. But do a SWOT analysis of the basket, and the gloss fades     HDFC SL ProGrowth Super II is a type-II unit-linked insurance plan ( ULIP ). Launched in September 2010, this is a small ticket-size scheme with multiple rider options and adequate death cover. It offers five investment options (funds) — one in each category of large-cap equity, mid-cap equity, balanced, debt and money market fund. COST STRUCTURE: ProGrowth Super II is reasonably priced, with the premium allocation charge lower than most others in the category. However, the scheme's mortality charge is almost 60% that of LIC mortality table for those investing early in life. This charge reduces with age. BENEFITS: Investors can choose a sum assured between 10-40 times the annualised premium...

Am you Required to E-file Tax Return?

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Am I Required to 'E-file' My Return? Yes, under the law you are required to e-file your return if your income for the year is Rs. 500,000 or more. Even if you are not required to e-file your return, it is advisable to do so for the following benefits: i) E-filing is environment friendly. ii) E-filing ensures certain validations before the return is filed. Therefore, e-returns are more accurate than the paper returns. iii) E-returns are processed faster than the paper returns. iv) E-filing can be done from the comfort of home/office and you do not have to stand in queue to e-file. v) E-returns can be accessed anytime from the tax department's e-filing portal. For further information contact Prajna Capit...

Section 80CCD

Top SIP Funds Online   Income tax deduction under section 80CCD Under Income Tax, TaxPayers have the benefit of claiming several deductions. Out of the deduction avenues, Section 80CCD provides t axpayer deductions against investments made in specific sector s. Under Section 80CCD, an assessee is eligible to claim deductions against the contributions made to the National Pension Scheme or Atal Pension Yojana. Contributions made by an employer to National Pension Scheme are also eligible for deductions under the provisions of Section 80 CCD. In this article, we will take a look at the primary features of this section, the terms and conditions for claiming deductions, the eligibility to claim such deductions, and some of the commonly asked questions in this regard. There are two parts of Section 80CCD. Subsection 1 of this section refers to tax deductions for all assesses who are central government or state government employees, or self-employed or employed by any other employers. In...

Bharat Bond ETF

Top SIP Funds Online   The government of India has paved the way for the launch of India's first corporate bond ETF called as Bharat Bond ETF. Edelweiss Mutual Fund will be managing it. The fund is mandated to invest in AAA-rated bonds of select public sector companies (see the table 'List of constituents and their proportions in the portfolio'). The government has a threefold objective behind launching this product. One, to deepen the liquidity of the Indian debt markets and provide a gateway for easy retail participation. Two, to solve investors' dilemma of picking premium bonds. Lastly, to help the underlying government-owned companies raise funding for their operations. But does it make sense for you, the investor, to invest in it? Lets find out. What is the product? As the name suggests, it is an exchange-traded fund which will be listed on a stock exchange from where its units can be bought and sold post launch. It will have two variants - one maturing in 3 ye...

What is Electronic Clearing Service (ECS)?

  As the name suggests, it's an electronic process through which money can be transferred from one bank account to another. According to RBI, this mode is usually used for regular payments and receipts, like distribution of dividend, interest, salary, pension etc. This mode is also used for collection of bills for telephone, electricity, water, various types of taxes, payment of EMIs , investments in mutual funds , payment of insurance premium etc. There are two types of ECS , like most other banking transactions, ECS credit and ECS debit. An ECS credit is used by a bank account holder , usually a large company or an institution for services like payment of dividend, in terest, salary, pension etc. If your mutual fund pays you dividend to your bank account, of all probability it is being paid through ECS credit.ECS debit, on the other hand, is used when a company or an institution is getting money from a large number of people. For example if you are investing in a mutual fund sc...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now