FII investment at record Rs 802 cr in debt market

By SiliconIndia   |   Wednesday, 21 May 2003, 07:00 Hrs
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NEW DELHI: Foreign institutions invested Rs 802 crore (Rs 8.02 billion) in the debt market yesterday. That's a record single-day investment in the 10 years of India's foreign institutional investment history.

But Nilesh Shah, CIO, Templeton AMC told CNBC India that foreign investment in the debt market is capped at $1.5 billion, and therefore, it won't make a significant impact on short-term money market rates.
However, he pointed out, it would provide an opportunity for the Reserve Bank of India, RBI, to continue pursuing a soft interest rate policy, which would be good for debt mutual fund returns.

He said this huge inflow has been due to lower interest rates in the dollar market, and higher short-term interest rates in the rupee market, compounded with an appreciation in the rupee. "The holding period return on trade could be in double-digits, which is not available anywhere in the fixed income market in the world," he said.

He also said, "FIIs mainly bought shorter-term treasury bills like the 91-day T-Bill and the 364-day T-Bill."

Foreign investments in debt during May last year, totalled Rs 14 crore (Rs 1.4 billion).

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