While foreigners continue to pile into Indian equities, they have turned sellers of the nation’s debt. Global funds pulled a combined 8,950 crore ($1.3 billion) from local sovereign and corporate bonds so far this month, according to data from the National Securities Depository Ltd. That’s a reversal from 16,640 crore of purchases in March.

Elevated oil prices, a rise in US Treasury yields and Reserve Bank of India taking a less dovish path than many had expected are among the key reasons for the outflows, according to Nagaraj Kulkarni, senior Asia rates strategist at Standard Chartered Bank in Singapore.

The withdrawals have been highest in corporate debt, totaling almost 7,400 crore. That compares with inflows of 14,770 crore last month after the RBI eased rules on foreign investment into company bonds.

Foreign holdings of India sovereign and corporate debt decline in April
Foreign holdings of India sovereign and corporate debt decline in April

Global funds have bought shares worth $684 million so far this month, taking the year-to-date purchases to more than $7.5 billion, the highest among major Asia markets tracked by Bloomberg.


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