Foreign investors have pulled out nearly Rs 6,000 crore from the Indian debt markets in the first two weeks of this month, after pumping in a staggering amount in September.
However, Foreign Portfolio Investors (FPIs) have pumped in just Rs 180 crore in the stock markets during the period under review.
"The recent rate cut by RBI is one of the factors for the outflow. With downward pressure on bond yields, debt does not seem attractive," SAS Online Chief Operating Officer (COO) Siddhant Jain said.
"Besides, new RBI Governor's dovish stance and flexibility to cut rates further if needed has helped in the outflow," he added.
Reserve Bank, on October 4, cut policy rate by 0.25 per cent to 6.25 per cent, a 6-year low. According to depositors' data, net withdrawal by FPIs stood at Rs 5,946 crore from the debt markets during October 3-14.
The outflow comes following a net inflow of Rs 9,789 crore in the preceding month (September). The low investment in equities could be attributed to a below-forecast reading on Chinese data that fanned fresh concerns about its economy and Fed Reserve's September meeting minutes which boosted the case for higher US interest rates this year, according to brokers.
So far this year, FPIs have pulled out a net sum of Rs 3,504 crore from the debt markets, while they have pumped in Rs 51,473 crore in equities, resulting in a net inflow of Rs 47,968 crore.
Mutual funds approach Sebi with 64 new schemes this fiscal
With mutual funds gaining traction among retail investors, asset management companies have filed draft offer documents with market regulator Sebi for as many as 64 new schemes, so far, this fiscal. Equity, debt, retirement, hybrid and fixed maturity plan (FMP) are some of the themes for which mutual fund houses have filed the applications.
ICICI Prudential Mutual Fund (MF), IDFC MF, Mahindra MF, HSBC MF, HDFC MF, Birla Sunlife MF, Tata MF, Axis MF and SBI MF are among the fund houses that have filed the offer documents for new fund offers (NFO) with Securities and Exchange Board of India (Sebi).
Interestingly, some mutual fund houses are keen to launch NFOs with Hindi names so that investors in rural areas understand the objective of the schemes in a better manner. The move is being seen as an attempt to move away from the old tradition of English names for such schemes. In the current fiscal so far, draft documents for 64 NFOs have been submitted with Sebi. Of these, 19 draft offers were filed last month alone.