Foreign portfolio investors are taking a selective approach to India, favouring government bonds over equities as they await clearer signals on the global growth outlook.
The cautious positioning reflects a preference for relatively lower-risk debt instruments amid uncertainty over the trajectory of global economic activity. Government bonds offer steadier returns and have benefited from India’s inclusion in global bond indices in recent years, which has channelled flows into the sovereign debt market.
By contrast, equity flows have been more measured as investors weigh valuations against the evolving macroeconomic backdrop. The divergence underscores how global funds are calibrating their India exposure across asset classes rather than committing uniformly.
Foreign portfolio investment is an important source of capital for Indian markets, and shifts in flows can influence currency and asset prices. A tilt toward debt suggests investors are seeking yield and stability while remaining cautious on riskier assets.
Market participants say the pace and composition of foreign flows will depend on developments in global interest rates, growth signals and risk appetite in the months ahead. For now, the bias toward Indian debt reflects a wait-and-see stance among overseas investors.
Created by Ayen Stabel.
Stabel is AI and can make mistakes.
Sources:
https://www.ibef.org/economy/indian-economy-overview