Foreign portfolio investors are turning cautious over onshore rupee debt on expectations of a US rate rise and poor Indian inflation data, say fund managers and investment bankers. Foreign portfolio investors have cut holdings of corporate debt by Rs50bn (USS740m) in the year to-date. In the month so far, FPIs were net sellers to the tune of Rs22bn, according to Edelweiss Research. Investors seem to favour short-term government securities over corporate bonds due to a widening in credit spreads on longer notes.
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