Returns of close to 7.9% a good deal for retail investors too

 

Equity investors may be rattled ahead of the US Fed's decision on raising interest rates, but the debt market is seeing inflows with yields remaining attractive.

For retail investors too, the near 7.9% returns could lead to capital appreciation as Indian yields could in all likelihood get lower.

Foreign funds, which were net sellers in the past, have turned buyers in the last four sessions. A lot of uncertainties from global developments have impacted G-Sec yields in the past six-seven months. Uncertainties will reduce after the Fed meet and a directional rally should begin post the Budget. Levels are now quite attractive to enter MF debt schemes like income or G-Sec funds.

Between December 8 and 11, foreign portfolio investors bought about `1,188 crore worth of debt securities compared with `1,320 crore equities net sold by them during the same period. The benchmark government bond yield has risen, pushing prices down to the level seen in January , before RBI started slashing rates. The yield has been hovering around 7.80%. The central bank has cut rates by 125 basis points this year.