Indian sovereign bond inflows cool for second week amid index inclusion | Information on Markets

By Malavika Kaur Makol

Abroad investments into India’s sovereign bonds slowed for a second straight week as India’s sovereign bonds joined a key international index.

 

Inflows into the so-called absolutely accessible route bonds, slowed to 35.9 billion rupees ($430 million) within the week by way of July 5, from 46.6 billion rupees within the earlier week, in response to the Clearing Company of India Ltd. information. About 75% of the FAR bonds had been added to JPMorgan Chase & Co.’s emerging-market indexes on June 28.

Traders had already positioned for India’s index entry and the inflows are most likely cooling now as focus shifts to fundamentals. An analogous response was seen in China’s case when its bonds had been added to international gauges about 5 years in the past.

To make sure, inflows within the week after India’s inclusion are above the weekly common of 21.7 billion rupees over the previous six months, in response to Bloomberg calculations. Some market watchers are optimistic demand for India’s bonds is right here to remain.

“International portfolio investor demand will proceed, and the pre-positioning which has taken place isn’t as materials as some suppose,” mentioned Nathan Sribalasundaram, charges strategist at Nomura Holdings Inc. “Onshore demand too within the lengthy finish will stay.”

India’s FAR bonds have seen eight straight weeks of inflows, attracting greater than $11 billion because the inclusion announcement in September. Nomura and Goldman Sachs Group Inc. are forecasting as a lot as $3 billion of month-to-month inflows over the subsequent few months as India’s preliminary weight of 1% on the index reaches 10% by March. 

First Printed: Jul 08 2024 | 6:15 PM IST