Foreign Portfolio Investors Set New Record by Selling G-Secs Worth Rs. 25,544 crore
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New Delhi: Government securities (G-Secs) worth Rs. 25,544 crore were sold by foreign portfolio investors (FPIs) under fully accessible route (FAR) in the first quarter of FY26. The instance marks the first such quarterly sale after their inclusion in global indices.
Factors including the recent conflict between India and Pakistan, narrowing spread between 10-year US Treasury (UST) and Indian 10-year G-Sec along with the tariff war of the US resulted in the selling of (G-Secs) and parking the proceeds in safe haven assets such as US Treasuries, reported The Hindu Business Line.
On June 28, 2024, G-Secs were included in JP Morgan Government Bond Index – Emerging Market (GBI-EM).
They were also included in Bloomberg's EM Local Currency Government indices, beginning January 31, 2025.
Investment in G-Secs on fully hedged basis has become less attractive after the yield spread between 10-year UST yield and the corresponding maturity G-Sec has compressed to about 180 basis points (bps) from about 400-500 bps a couple of years back.
'This has primarily happened due to a steep rise in UST yields on account of concerns over the US fiscal deficit, large borrowing and expected huge redemption pressures (10-year UST touched around 4.58 per cent), while Indian bond yields have remained relatively stable thanks to RBI's monetary policy actions in the recent months and new 10-year government bond is currently trading around 6.20 per cent,' said Venkatakrishnan Srinivasan, founder and managing partner, Rockfort Fincap LLP.
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