Bond Index

Indian government bonds or government securities (G-secs) would be included in JP Morgan-Emerging Market Bond Index beginning Friday, a move that will bring down borrowing cost for the government. The inclusion of IGBs will be staggered over a 10-month period from June 28, 2024 to March 31, 2025, indicating one per cent increment on its index weight. India's weight is expected to reach the maximum threshold of 10 per cent in the GBI-EM Global Diversified, and approximately 8.7 per cent in the GBI-EM Global Index. This would help attract higher foreign flows, as many overseas funds are mandated to track global indices. It will also help bring in large passive investments from overseas, as a result of which more domestic capital would be available for industry, as crowding out would be reduced. In her Budget speech for 2020-21, Finance Minister Nirmala Sitharaman had said, Certain specified categories of government securities would be opened fully for non-resident investors, apart f

India inclusion in JP Morgan Bond Index: The inclusion process will begin on June 28, 2024 and will be completed over a period of 10 months, till March 2025

It will also pull $2.9 billion and $2.5 billion from the Czech Republic and Chile respectively, it added

To accommodate India's 10 per cent weight in the GBI EM index, HSBC said in a recent note, a reweighting will occur for other EM peers in the index, which will see a reduction in their weights.

The index inclusion is expected to attract $40 billion in inflows in 18 months, according to estimates from Goldman Sachs Group Inc. and others

De Guzman's comments mirror global investors' generally bullish outlook on the country that's been layered with notes of caution about macroeconomic challenges

The difficulty in setting up to trade in India due to an elaborate documentation process has been one reason why foreign investors have been apprehensive about the nation's entry into global indexes

Once the change takes effect on June 28, it will be easier to compare the performance of an Indian credit fund with an investment in Singapore, Korea or the US, said the head of BPEA Credit

Investors have cited several obstacles to obtaining an onshore permit in India, including heavy documentation process, margin requirements for trading, barriers to freely move money out of the country

Chinoy also highlighted the dynamic relationship between the dollar and the rupee

The aim will be to "prevent volatility or volatile inflows" but "never" to restrict outflows, Somanathan said, adding that "all possibilities are open to keep volatility in check.

Foreign portfolio investors bought a net 127.2 billion rupees ($1.53 billion) of bonds in November, the highest since June 2017, data from Clearing Corp of India showed

There are several moving parts in the whole liquidity scenario. We will watch the evolving trends and notify as and when necessary: Das

If you are unsure about where rates are headed over the next year, go for dynamic bond funds

Indian government bonds and the local currency took the news in their stride.

As markets anticipate inclusion of the debt in other indexes, including the Bloomberg Global Aggregate, the flows could rise to $50 billion by the end of next year

For the fast-growing economy that typically runs a current-account deficit, the decision opens the door to as much as 10% of the $236 billion of assets at funds

The rally in PSBs, analysts feel, was more a knee-jerk reaction to the development, and the actual benefits will start to accrue once the addition takes place in 2024

The inclusion is expected to spur staggered inflows of $22-$30 billion, analysts estimate

Market experts are projecting approximately $30 billion in inflows into the government bond market following India's inclusion in the index