FII inflows in debt market cross Rs 1 lakh cr mark in 2014

Improved fundamentals of the Indian economy, a decisive mandate to the BJP-led NDA are the main drivers

Overseas investors have pumped in a staggering over Rs 1 lakh crore into the Indian debt market since the beginning of the year primarily on account of government's reform agenda.

As per the latest data, foreign investors have purchased debt securities worth Rs 2,82,194 crore in this year so far, while they offloaded bonds to the tune of Rs 1,64,820 crore during the same period, resulting into a net inflow of Rs 1,17,374 crore (USD 19.45 billion).

These huge inflows included a net investment of Rs 14,900 crore in the this month so far.

According to market experts, improved fundamentals of the Indian economy, a decisive mandate to the BJP-led NDA at the Centre, various reform measures announced by the government and high interest rate have caught the fancy of overseas investors (Foreign Institutional Investors, sub-accounts and Foreign Portfolio Investors).

The inflow is also significantly higher in debt compared to equities, which till date have attracted Rs 85,330 crore (USD 14.2 billion).

Interestingly, most of the inflow into Indian debt has gone into government securities.

Since May 16, when the election results were announced, overseas investors have poured in close to Rs 86,000 crore in the Indian debt market, as the verdict met foreign investors' expectations in the Lok Sabha polls.

In 2013, foreign investors had pulled out a net amount of Rs 50,848 crore from the country's bond market.

The strong inflows in the recent months have taken the cumulative net investments of foreign investors into Indian debt market to Rs 2.22 lakh crore, while their investments in dollar terms is USD 44 billion.

This is based on the data since November 1992 when overseas investors began investing into Indian markets.