Foreign investors pivot to short India debt ahead of policy turn
Key takeaways
- REUTERS/Francis Mascarenhas/File Photo By Dharamraj Dhutia Thu, June 4, 2026 at 6:48 PM GMT+7 2 min read By Dharamraj Dhutia
- Overseas investors overall bought bonds worth 221 billion rupees in January-February, while in March, they sold a record 177 billion rupees, before turning buyers in April-May.
- Indian government bond yields have risen over the last three months, with shorter duration yields - most sensitive to rates - spiking on inflation concerns due to the Iran war-linked energy shock.
Foreign investors pivot to short India debt ahead of policy turn 1 / 2 FILE PHOTO: A man walks past a Rupee installation at the Reserve Bank Of India (RBI) headquarters in Mumbai FILE PHOTO: A man walks past a Rupee installation at the Reserve Bank Of India (RBI) headquarters in Mumbai, India, April 8, 2026. REUTERS/Francis Mascarenhas/File Photo By Dharamraj Dhutia Thu, June 4, 2026 at 6:48 PM GMT+7 2 min read By Dharamraj Dhutia
MUMBAI, June 4 (Reuters) - Overseas investors are opting for short-term Indian government bonds as they find attractive entry points amid expectations of the interest rates cycle turning, with the Iran war driving inflation higher.
Bonds with maturities of less than five years made up over two-thirds of the top 10 notes foreign investors bought during March-May, higher than less than half of similar purchases in January-February, clearing house data showed.