After Budget Day, Investors Withdrew Rs 17,220 Crore From Stocks, Bond Markets

Corporate bonds saw the biggest outflows in about two years after the government last month announced a bigger-than-expected borrowing plan in its budget, triggering a spike in yields

After Budget Day, Investors Withdrew Rs 17,220 Crore From Stocks, Bond Markets

Yields on top-rated rupee corporate notes maturing in three years jumped by 74 basis points

Investors withdrew Rs 17,220 crore ($2.5 billion) from the Indian stock market and company debt mutual funds in February as concerns mounted about the sustainability of returns. Corporate bonds saw the biggest outflows in about two years after the government last month announced a bigger-than-expected borrowing plan in its budget, triggering a spike in yields. Equity indexes, which benefit from a stimulus, surged to a fresh record, prompting local investors to book profits.

"The period of unusual returns is getting over," said Vidya Bala, co-founder at Chennai-based research firm Primeinvestor.in. "Also, many investors could be waiting it out till the interest rate environment settles."

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Key Numbers:

  • Investors withdrew Rs 6,750 crore from corporate bond portfolios, biggest outflow in at least 23 months
  • Net withdrawals from stock funds were Rs 10,470 crore, eighth consecutive monthly outflow and biggest since November
  • Overnight and liquid funds received Rs 16,780 crore; money market funds got Rs 9,580 crore, indicating a preference for perceived safety
  • Data from Association of Mutual Funds in India, published Tuesday

Yields on top-rated rupee corporate notes maturing in three years jumped by 74 basis points to 5.61 per cent last month, the biggest rise since 2013.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)