The biggest casualty is clearly the debt market since mutual funds were the only parties that bought and sold corporate bonds in the debt market. Insurance and pension funds and even banks are usually hold-to-maturity buyers. So the vibrancy in the debt market is bound to be hurt if debt funds don’t get incremental money.
The reasons for poor retail participation in the debt market are low awareness and understanding of bond markets, high transaction costs, and lack of access to the market. The RBI is trying to rectify these flaws
ICRA Gilt Indices, ICRA Liquid Indices, ICRA Corporate Bond Indices and ICRA Composite Debt Indices, the four indices launched, would help asset managers and financial services companies make objective analysis and provide comprehensive benchmarking of debt portfolios.
So far this calendar year foreign investors (FPIs) have poured in USD 30 billion into domestic capital markets out of which USD 23 billion has flown into domestic bonds while capital account surplus has more than compensated for the current account deficit and that has led to persistent strength in the domestic currency.
These changes must be watched carefully to understand the impact on the portfolio.
DBS' wealth management business has quadrupled over the past six years, and now accounts for to 13 to 14 percent of group revenue.
Foreign investors have pulled out more than Rs 10,000 crore from the Indian capital market this month, after pumping in Rs 20,232 crore in September.
Even though most of Asian funds are overweight on India, the view isn't anything that the markets should be worried about, according to Susmit Patodia, Head of Sales, Institutional Equities, Motilal Oswal Financial Services. Emerging markets flows have been strong over the past few weeks, he told CNBC-TV18.
Overseas investors have infused more than $2 billion into the Indian capital markets so far this month on rising hopes of passage of the GST Bill in the Rajya Sabha and expectations of better corporate earnings.
Domestic institutions including state-run behemoth LIC saved the day for Indian markets on June 20, as overseas investors pressed sell-button amid 'Rexit' jitters to take out over Rs 2,837 crore from Indian markets -- the highest single-day outflow so far this fiscal
Foreign investors dumped shares worth Rs 178 crore in the first two weeks of May as worries over global economy and amended Indo-Mauritius tax treaty hurt the sentiment, reversing the last two months' bullish trend.
For previous assessment years where the above information is not available in the I-T Return, FII/FPI may provide such details in their online response on the e-filing portal of the www.incometaxindiaefiling.gov.in to the previously issued notice.
HR Khan's comments, at an event organised by the Federation of Indian Chambers of Commerce & Industry (FICCI), come as the central bank has unveiled new debt initiatives this year, including the introduction of a 40-year bond and raising debt investment limits for foreign investors.
"While Ind-Ra continues to expect the Reserve Bank of India to reduce policy interest rates by 25 basis points on September 29, 2015, given the low inflation and the attractive real interest rates, the uncertainty factor may limit any aggressive reduction in the policy rates," it said
Foreign investors have pulled out nearly Rs 7,000 crore from the capital markets in about two weeks mainly on account of a combination of global and domestic issues.
This comes on top of a net inflow of Rs 5,323 crore in equities and debt witnessed during the last month.
With USD 70-80 billion net long rupee positions having built over the last few months, it makes a strong case for volatility and vulnerability, feels Ananth Narayan of Standard Chartered Bank.
Fitch Ratings says that, emerging Asia‘s (EM Asia) local-currency debt capital markets have grown rapidly since 2008, but its banks continue to be the main source of funding for corporates, and hold the vast majority of private-sector credit exposure.
The fund inflow this month takes the investment to above Rs 43,000 crore (USD 7 billion) so far in 2015. In January, overseas investors had pumped in Rs 33,688.19 crore in Indian debt and equities.
Mutual funds pumped in more than Rs 6 trillion in the debt markets in 2014, an increase of 28 percent from the preceding year, primarily on account of improved sentiment.
Ruling out the possibility of a pre-Budget rally, Sandip Sabharwal of Asksandipsabharwal.com feels a deeper correction is underway with the Nifty falling till 7,500.
The offshore bond issuances by non-financial Indian corporates is estimated to have crossed USD 13 billion so far in 2014 as against around USD 9 billion in 2013.
A finmin committee "had recommended for consolidation of privately placed bonds so as to avoid fragmentation of debt market with multiple issues and for re-issuances which help in creation of large floating stocks which is needed to enhance market liquidity," Sebi said in the statement.
Last December, FIIs became net buyers of debt, after six month of steady outflows, as US Federal Reserves announced reduction in its bond purchases by USD 85 billion in late May.
Operating profits have grown by about 4 percent and our business is of high operating leverage so to that extent some pressure on the profitability was to be expected during this quarter, says Naresh Takkar, Managing Director, ICRA Limited.