“The index inclusion process is a staggered process that starts from the middle of next year and ends by March ‘25. So, we will see flows coming into the markets over a period of time and it is a significant development from the perspective of ensuring that there is a new source of demand for government bonds.”
While JP Morgan s decision to add Indian bonds to its bond index is seen as a clear positive for the debt market, having the potential to increase foreign inflows, stabilise the depreciating rupee and showcase the country s resilient macroeconomic standing, will it have a positive impact on domestic equities? Analysts say it will, but only in the long-term.
JP Morgan Chase & Co.’s plan to include Indian government bonds to its emerging markets bond index next year will draw scrutiny from foreign investors on public finances, particularly on efforts to cut the budget deficit.
Index-eligible bonds in India have seen an inflow of about $4 billion, so far, this year, indicating that the inclusion was largely priced in, Rajeev Radhakrishnan, CIO-Debt, SBI Mutual Fund says