Date:30/11/2005 URL: http://www.thehindubusinessline.com/2005/11/30/stories/2005113003211500.htm

Back FIIs on selling spree in debt market

Rajesh Abraham

Mumbai , Nov. 29

FOREIGN funds are on a selling spree in the Indian debt market even as they continue to pump in fresh money into the domestic equity segment.

Foreign institutional investors sold $469.3-million worth debt in India in November (1-28); during the same period they made a net purchase of $844 million in equities.

The net sales in the debt segment by the FIIs in October was much lower at $199.20 million; the net sales by the FIIs from January 1 to November 28 in the Indian debt markets was close to $1 billion ($999.9 million), as per SEBI data.

Analysts attributed the negative trend in the debt market to the recent hike in US Fed rates, making the Indian debt relatively less attractive. Further, the depreciation of the Indian rupee and the hike in interest rates in other Asian economies meant that the foreign funds had alternative destinations, they said.

"The rupee is already under pressure and an impending Fed rate hike would result in the trend (debt sales by the FIIs) to continue," said an analyst with Centurion Bank.

Meanwhile, mutual funds continued to be net buyers on the Indian debt market. During this month (November 1 to 26) they purchased Rs 1,858.6-crore worth debt, taking the total purchase for the April-November period to Rs 32,001.7 crore.