Indias government bond market could see inflows worth $100 billion over the next three to five years as operational issues are streamlined, prompting large institutional investors such as sovereign wealth funds and central bank reserve managers to favor debt in the worlds fastest-growing major economy, HSBC Asset Management India said.
In the Indian bond market, total value of government debt or government bonds stands at Rs 161.1 lakh crore. While corporate bonds valued at Rs 44.2 lakh crore as of September 2023
The nations burgeoning life insurance and pension fund industries, driven by an expanding middle class, are changing the landscape for Indias $1 trillion sovereign debt market. The sale reflects their growing heft, and helps Prime Minister Narendra Modis government reduce its reliance on purchases by banks to fund record borrowings.
“We are researching the insurance sector. Some of the businesses seem to be looking at earnings coming back to an extent and so that is one space I am looking at. Among others, engineering and the capital goods sector continues to be very interesting and pharma looks very interesting once more.”
Foreign investors currently hold less than 2% of government securities. Officials have in the past worried about the consequences of outsized debt inflows, leaving local banks and mutual funds as the main buyers of bonds.