Global investor sentiment remains robust towards Indian debt markets, with approximately Rs 83,360 crore ($10 billion) flowing into Indian bonds since September 2023.
This surge in foreign investment precedes the scheduled inclusion of Indian bonds in a prominent global index by the end of this month.
Recently, JP Morgan announced the integration of Indian bonds into emerging global indices starting 28 June, marking a significant milestone for the Indian financial market.
According to data from the Clearing Corporation of India, foreign funds have already injected around Rs 7,350 crore ($881 million) into Indian bonds as of June 18, compared to Rs 5,200 crore in May.
This influx follows a period in April when foreign investors sold Rs 9,830 crore worth of bonds in the Indian debt market.
Bloomberg Index Services plans to include select Indian bonds in its emerging markets local currency index starting next year, solidifying India’s appeal as a prime destination for global fixed-income investors.
The substantial investment inflow has contributed to keeping bond yields low despite recent fluctuations.
The yield on India’s 10-year government bond, for instance, has declined by 8 basis points from its recent highs, currently resting at 6.98 percent.
This influx of foreign capital into Indian bonds underscores investor confidence in the stability and potential returns of the Indian debt market amidst broader economic developments, including the recent formation of the NDA coalition government led by Prime Minister Narendra Modi.
The integration of Indian bonds into global indices not only enhances market visibility but also opens avenues for greater participation from international investors, potentially bolstering India’s standing in the global financial landscape.
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