In advance, foreign institutional investors (FII) only numbered $ 3.4 billion to Indian bonds so far this year. It was lower than the $ 5 billion in the pre-pandemic year of 2019. Because the interest rate cycle has changed with most central banks including the Bank of India (RBI) reserves that roll out ordinary extra steps, interest bonds are expected to decrease. .

However, when interest rates climb the yield of bonds follow that produces mark-to-market losses on investment. The bond results move upside down with bond prices.

But consider carefully and Indian bonds really get more money from foreign investors compared to glamorous equity cousins. It was also a full year with blockbuster initial public offering from stock from start-up. This IPO sees an unprecedented interest of investors. But overall, equity received an investment of $ 3.8 billion so far. The inflow of shares in the previous years was bigger.

Bonds, on the other hand, received $ 4.5 billion through voluntary retention routes (VRR) which were discarded by Bank of India (RBI) reserves (RBI) in 2020. VR investment must be held for a minimum of three years by investors and counted outside. The general debt limit is prescribed for FII. Investors must also maintain a certain percentage of their investment in India, the regulation prescribes. Bond traders show that Indian bond expectations included in the global index of bonds have attracted more stable investment. The government seriously began throwing the inclusion of Indian government bonds in the global index. This inclusion is expected to carry a stable dollar into bonds because long-term funds have an investment allocation intended into the global bond index and Indian bonds can benefit from it.

Another factor that has helped Indian bonds is the fact that bonds in developed countries have provided negative real returns as a result of bonds dropped. Indian bond curves continue to produce real positive returns in the most liquid term.

It still has to be seen whether Indian bonds will continue to attract stable funds in 2022 too. In addition to gradually reduce global liquidity with US federal caping reducing easing, investors can be voters in terms of placing money in market debt that appears. Note that this year, foreign investors spend $ 1.3 billion through the normal open route.

The inclusion of Indian bonds in the global index of bonds has become much more important now.