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Debt markets preferred channels for investors
by Jenny HodgeIndia’s apex business body, the Associated Chambers of Commerce and Industry of India (ASSOCHAM), says that due to volatility in equity market, investors now are more inclined to park their surpluses towards debt market and mutual funds, rather than adhering to equities.
The ASSOCHAM President, Mr. Sajjan Jindal, is of the view that the latest trends show that investors, until about 3rd week of June 2008, in total invested about Rs. 16 billion ($400 million) in debts market as against less than 12 billion ($300 million) in equities.
The global slowdown on account of high crude oil and food prices has caused turmoil in the capital markets.
As a result, investors are looking for safe instruments in debt markets.
Releasing the Chamber assessment, the ASSOCHAM Chief said that corporate bonds, mainly debentures issued by companies of good standard, are being preferred to be subscribed by investors.
Secondly, the debt market in India is becoming a fairly well segmented lot which includes government securities, corporate bond market, PSU bonds, fixed deposits and other such similar savings instruments.
It has come to the notice of the ASSOCHAM that investors are taking part in debt markets mainly through the medium of participatory note.
The same case occurs with mutual fund industry, as investors are moving more towards balanced funds and fixed maturity plans offered by mutual fund houses as the equity markets are fraught with volatility and price decline.
The Chamber assessment also holds that resources are needed for infrastructure development.
The requirement of mutual funds industry, new pension system and the developing market for securitised product, rising concerns about the asset liability management on the part of the banks, financial institutions along with development of derivative markets will see the debt markets grow exponentially in the future.
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