14 hrs ago
Global Funds Sell Indian Bonds as Yields Stay Above 7%
Foreign investors sold a large amount of Indian bonds and shares.
They sold $503.1 million of Indian debt on September 11.
This was the biggest one-day bond sale since April 2.
Investors were waiting to see whether the United States Federal Reserve would raise interest rates.
Higher US rates can make investments in emerging markets less attractive.
Oil prices also rose to about $108 per barrel, which could make imports more expensive for India.
The Reserve Bank of India is also watching banking-system liquidity and may influence bond markets through its policies.
The Indian rupee still strengthened slightly against the US dollar.
Global funds sold a net $503.1 million of Indian debt on September 11, the highest single-day selling since April 2.
Foreign investors also sold a net $102.1 million of Indian equities on September 11.
Investor attention centered on the Federal Reserve’s expected monetary policy decision and the possibility of a 25-basis-point rate hike.
Brent crude rose to around $108 a barrel, raising concerns about India’s import costs and inflation.
The Reserve Bank of India’s planned government-securities sale and its upcoming policy review are influencing domestic bond-market sentiment.
- Who
- Global funds, Indian policymakers, the United States Federal Reserve and market participants.
- What
- Global funds sold Indian bonds and equities while Indian bond yields remained above 7%.
- Where
- India’s debt and equity markets, amid developments in global markets.
- When
- The bond and equity sales occurred on September 11; the Federal Reserve decision was expected later that day.
- Why
- Investors were responding to expected US monetary tightening, high crude prices, rising US Treasury yields and domestic liquidity concerns.
Key facts
- Indian debt sold
- Global funds sold a net $503.1 million on September 11.
- Equities sold
- Global funds sold a net $102.1 million of Indian equities on September 11.
- Previous selling comparison
- The debt selling was the highest single-day net selling since April 2.
- Expected US rate move
- CME FedWatch indicated nearly a 90% probability of a 25-basis-point rate hike.
- Brent crude
- Brent crude prices rose to around $108 a barrel.
- US Treasury yield
- The benchmark 10-year US Treasury yield moved above 5%.
- Rupee movement
- The rupee opened 7 paise stronger at ₹95.89 per US dollar, compared with ₹95.95 previously.
Sources
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