Rotation into debt continues

Indian institutional flows into debt has been relentless this year. DIIs have pulled ₹ 12,511 crore from equities and pumped ₹ 2,31,965 crores into debt during Jan-May 2013. It appears that as though the entire market has made a one-way bet that rates are going to fall this year… or have they gone so risk-averse that they have decided to ditch equities completely?

DII fund flows Jan-May 2013


FIIs however continued to hoover up equities. Pumping in ₹ 83,206 crores during the same period. Their interest in Indian debt was only a fraction of the domestic appetite.


FII flows Jan-May 2013


This is interesting because of the questions it raises. Do FIIs think Indian debt is too expensive compared to equities? Are they taking a contrarian stance to domestic institutionals? Is there something wrong with the way our policies are setup that incentivizes foreign investment in equities over debt?

Whatever it maybe, equity investors better pray that FII tide doesn’t turn too quickly.

Previously: The Great Rotation into Debt



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