India sees biggest bond outflows since 2020 amid global volatility

Overseas investors sold Indian debt at a pace not seen since the pandemic, as bond markets around the world sold off due to jitters about sticky inflation. 

 

They sold a net $705.5 million of fixed-income securities on Jan. 8, according to the Central Depository Services figures compiled by Bloomberg. That’s the biggest single-day sale since May 2020. 

 

Investors are withdrawing funds amid a global bond market selloff, as they reprice expectations for central bank policy easing. The yield on 30-year US Treasuries rose to the highest in more than a year this week, while the turmoil in UK gilts market has raised concerns that the Bank of England may slow its rate cuts. 

 

 

 

“The year has started with a bearish sentiment toward bonds, globally,” said Rajeev De Mello, a global macro portfolio manager at Gama Asset Management SA. “In an environment of a stronger US dollar, global investors are retracting further from emerging markets.” 

 

Indian debt proved a popular play for foreign investors in 2024, attracting inflows as the country’s government bonds joined JPMorgan Chase and Co.’s flagship index. But a narrowing yield gap with the US and a rupee trading at historic lows versus the dollar are denting its appeal.