Investor confidence

Index inclusion also has risks

There is considerable enthusiasm among financial-market participants over India’s inclusion in the JP Morgan Government Bond Index-Emerging Markets. Last week, India officially became part of the index, which global investors widely track. India’s weighting in the index will be increased by one percentage point every month till the cap of 10 per cent is reached. According to estimates, funds worth about $240 billion track this index, which means about $24 billion will flow into India. In fact, the flows may be higher because non-index investors too may want to increase their exposure to India after its inclusion