India’s 10-year benchmark bond yield was at 7.1866%, against its previous close at 7.2016%. — Reuters
MUMBAI: Indian government bond yields fell in the early session yesterday, following a proposal to include eligible domestic bonds in the Bloomberg Emerging Market (EM) local currency index, which will bring foreign inflows to India.
India’s 10-year benchmark bond yield was at 7.1866%, against its previous close at 7.2016%.
Bloomberg Index Services’ proposal on Monday came a few months after JPMorgan said it would include India in its widely tracked emerging-market debt index in June.
“These inclusions stand to improve the demand-supply dynamics for the sovereign bonds by tapping a significant under-realised investor group,” Radhika Rao, economist at DBS Bank said.
It will also help balance fiscal discipline with the need to boost infrastructure capabilities and support the overall balance of payments math, Rao added.
There had been a jump in foreign investment in Indian bonds in 2023 as JPMorgan’s decision to add the debt to its indexes boosted inflows to a six-year high.
“There’s some optimism but a sharp fall is unlikely to be sustained as inclusion in the index will not bring significant inflows as the overall assets under management are small,” a primary dealer said. — Reuters
