First time in six months! FPIs turn net buyers in debt with Rs 1,673.63 cr buying in August so far; check FIIs data

After turning net buyers in the cash market after around eight months, the Foreign Portfolio Investors (FPIs) have now also become net buyers of debt so far in August. This comes nearly after six months on the back of cooling oil prices, easing inflationary pressure, manageable deficits to buoyant tax collections. 

According to the depository data, foreign investors have so far bought debt worth Rs 1,673.63 crore in August as compared to net sellers of debt worth Rs 2,056.33 crore in the previous month. 

In the cash market, FIIs have been net buyers this month with a net purchase of Rs 17,970.62 crore till August 19. In a reversal of trends, DIIs sold to the tune of Rs 6052.67 crore during the same period. 

"It happened due to the overall market condition - signs of inflation cooling off, prospects of oil staying low due to cooling global demand and China slowdown, manageable deficits to buoyant tax collections," Kunal Sodhani, Vice President, Global Trading Centre, Shinhan Bank, told IANS. 
 

Due to this, the yield on the benchmark bond has also eased by nearly 30-40 basis points. The 10-year benchmark 6.54%-2032 bond yield closed at 7.2639 per cent on Friday. 

The retail inflation of India eased further in July to 6.71 per cent due to easing of food prices and Brent crude prices in the international market. 
 

Even after this, the inflation remained above the Reserve Bank of India`s (RBI) upper tolerance band of 6 per cent for the seventh consecutive month. 

Retail inflation was at 7.01 per cent in June. 

Meanwhile, to tame inflation, the RBI has hiked repo rate by 50 basis points to 5.40 per cent in the latest policy meeting. With this, the central bank hiked 140 basis points in repo rate since May 2022 to control inflation. 

Going forward, inflows are likely to continue, said experts. 

"MPC may persist with hikes till real rates are projected to be in positive territory in medium term, which may happen pretty soon. Bonds may rally some more before getting range bound," Sodhani said. 

With Inputs from IANS