High real interest rates, strong rupee bring FPIs to debt market

However, risks are also increasing and could trigger a change in the trend seen so far

Inflows from foreign portfolio investors (FPIs) continue unabated into the debt market despite a risk of lower earning, owing to the narrowing spread between developed country papers and Indian government bonds.

While all emerging markets (EMs), particularly those in Asia, continue to attract huge capital flows, the Indian one stands out. According to financial services entity Nomura, in the June quarter, India recorded its highest ever quarterly debt inflow, both in the government bonds and corporate bonds segments.

Total inflow in Indian debt has been Rs 63,490 crore, of which Indian government bonds have inflow of Rs 42,760 crore. On