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

ICICI Prudential Dynamic Plan Invest Online

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   ICICI Prudential Dynamic Plan             Invest Online This fund does remarkably well during falling markets, but fails to show the same prowess during a rising market. The fund sticks to its mandate to adapt to the dynamic nature of the market by shuttling between debt and equity. It takes aggressive asset calls in equity when the market surges by investing in quality mid-cap stocks. At the same time, it adopts a defensive strategy by investing in debt and cash when markets get overvalued, making it a good long-term choice.     For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call     Leave a missed Call on 94 8300 8300   Leave your comment with mail ID and we will ...

What are the factors affect the changes in Interest Rate of Fixed Deposits?

  What are the factors affect the changes in rate of Fixed Deposits? Fixed Deposits are now considered to be a very old fashioned method of saving, but still attract many investors since they have guaranteed returns at the end of the tenure of the investment at a decent interest rate. There are various factors that affect the rates of interest for a Fixed Deposit. Policies of the Reserve Bank of India   - The several norms and restrictions posed by the Reserve Bank of India , in order to gain optimum control over credit and inflow and outflow of fund throughout the country. The repo rate changes, cash reserve ration tends to change and these changes affect the banking products like Fixed Deposits, loans etc. Recession   - When unemployment in a country crosses the benchmark set Recession hits, and slowly the country faces an economic slow movement, affecting the purchasing power of the people in the country, forcing the Reserve Bank of India to release more funds in the financial marke...

Understanding Your Cibil Credit Information Report

   WE ARE all familiar with the anxiety and uncertainty that we feel when applying for a loan. After all, it's the lender who decides whether we can own our dream home, our first car, or whether our children can pursue higher education. In a nutshell, a better life depends on the lender's decisions.    While other factors do play a part in the lender's decision, the Cibil Credit Information Report ( CIR ) plays a crucial role in a lender's decision to approve a loan application.    Previously, lenders would treat all loan seekers equally. Each applicant, if approved by the lender's internal credit policy, would be charged at the same interest rate for a particular loan size and purpose. The lenders would charge a higher interest rate to all the borrowers, in order to compensate for the possible default of a small portion of the loan disbursed. In other words, it's like a professor (the lender) punishing an entire class (borrowers) for the mischief played b...

Mutual Fund Review: ING Dividend Yield

  ING Dividend Yield's small assets enable the fund manager to churn in impressive returns… Strategy The aim of the fund is to invest in stocks which offer a high dividend yield. This fund deploys a value based strategy which aims to gain from investing in fundamentally strong and free cash flow generating businesses. The scheme focuses not only on growth but also on the cash generated by the business, which mostly leads to stable returns even in volatile markets. This fund has a low volatility because of its investment in high yielding stocks. The scheme tries to include stocks that yield dividend above the dividend yield of the Nifty and stocks with liquidity, which throws up a universe of 150 stocks.   Our View Launched in October 2005, this fund invests at least 65 per cent of its assets in high dividend yield stocks. The fund has consistently maintained a mix of stocks across varying market capitalisation, with a higher tilt to mid caps compared to small caps. Howev...

Capital Protection Oriented Funds

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   Capital Protection Oriented Funds   Erosion of capital is one of the key concerns for investors wanting to invest in equity mutual funds. To address this concern, asset management companies have launched Capital Protection Oriented Funds (CPOFs). What are CPOFs? CPOFs are generally three to five-year, closed-ended funds where 70-80% of the portfolio is invested in fixed income securities, which mature on or before the scheme's tenure. The investment in fixed income securities grows to 100% at the end of the tenure, providing the investor with capital protection. The remaining portion (20-30%) is used to take exposure to equity, which provides the upside. Exposure to equities is either by directly buying equity stocks (plain vanilla CPOFs) or by b...
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