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The National Stock Exchange (NSE) will auction tomorrow government debt securities worth Rs 7,152 crore ($1.2 billion) for overseas investors, whose total investment has crossed 90% of permitted limit.
At the same time, NSE in a circular also asked foreign investors not to increase their positions in interest rate futures (IRF) market as such exposure has also crossed the permitted levels. A similar circular was released by BSE as well.
These decisions come amid a strong surge in overseas investors interest in Indian bond market.
Their total investment in government debt has reached Rs 92,394 crore on June 9, which is 92.82% of total permitted limit of Rs 99,546 crore.
Consequently, NSE will conduct an auction tomorrow for allocation of unutilised investment limits worth Rs 7,152 crore in government debts, the bourse said in its circular issued today.
The auction will begin at 1530 hours and close on 1730 hours. A mock bidding session was conducted today to check the system performance.
Besides, NSE said: "FIIs (Foreign Institutional Investors) are advised not to increase their long position in IRF till the time the overall long position of FIIs in cash and IRF comes below 85% of existing permissible limit."
To boost foreign fund inflows into the capital markets here, regulator Sebi in September last year, allowed overseas entities to invest in government securities without any auction till such investments reach 90% of permitted limits.
Once this limit is reached, the auction mechanism now get triggered for allocation of the remaining limits.
FIIs have invested a net amount of over Rs 52,000 crore in debt market so far in 2014 itself. Equity market has also seen similar trends with overseas fund inflow of over Rs 50,000 crore since the beginning of the year.
