'Investors preferring debt market to equities'

New Delhi: Investors are preferring debt market and mutual funds to equities, mainly because of the high volatile nature of the equity markets, according to a report by the Associated Chamber of Commerce and Industry of India (Assocham).

By the third week of June, investors pumped in about 16 billion in debt market against 12 billion in equities, the industry forum said Monday.

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"The global slowdown on account of high crude oil and food prices has caused turmoil in the capital markets. As a result, investors are looking for safe instruments in debt markets, even if the returns are lower," said Assocham President Sajjan Jindal.

"Investors prefer corporate bonds, mainly debentures issued by companies of good standard. The debt market in India is becoming a fairly well segmented lot which includes government securities, corporate bond market, PSU (public sector undertaking) bonds, fixed deposits and other such savings instruments," Jindal said in the report.

"Investors are taking part in debt markets mainly through medium of participatory note. Same case is with mutual fund industry as investors are moving more towards balanced funds and fixed maturity plans offered by mutual fund houses," the report said.

According to Assocham, rising concerns about the asset, liability management of the banks, financial institutions along with development of derivative markets will see the debt markets grow exponentially in the future.
Source: IANS