FPIs renew interest in Indian bonds

Dealers say foreign investors are now taking keen interest in lower-rated corporate bonds, too

Foreign portfolio investors (FPIs) are returning to the bond market after battling negative sentiment in recent months.

In February, till last Thursday, they’d bought Rs 5,118 crore in Indian debt paper. This is the first month since September 2016 that they’ve been net buyers on Indian bonds. 

Surprising, as in early February, the Reserve Bank (RBI) kept policy rates unchanged but changed the stance to neutral, indicating rates could head upward. Bond yields have risen 50 basis points (bps) since announcement of the policy on February 8. On the policy day itself, net of buying, FPIs had sold Rs 674