Home / Markets / Stock Markets /  Bond investors risk getting burned If India fails to make index

Overseas investors are pouring into Indian bonds, putting the securities at risk of losses if a long-awaited inclusion into global indexes once again fails to take place.

Bond purchases by global funds under the so-called Fully Accessible Route jumped to 42 billion rupees ($529 million) in August, the most since January. They have already snapped up an additional 31 billion rupees of the securities in September.

The inflows have added fuel to a bond rally driven by optimism that JPMorgan Chase & Co. will announce the inclusion of Indian debt in its emerging-markets index as early as the middle of this month. Any disappointment may damp sentiment and lead to a selloff, according to Quantum Asset Management Co.. 

India’s benchmark 10-year yields have dropped about 50 basis points from their June high of 7.62%, to close at 7.12% on Wednesday. In contrast, similar-maturity US Treasury yields jumped about 40 basis points since the end of that month. 

“The only thing driving the Indian bond market is the index-inclusion theme," said Pankaj Pathak, a fixed-income fund manager at Quantum Asset in Mumbai. “If by any chance we don’t get that, I wouldn’t be surprised to see 10-year yields returning to 7.50%."

This story has been published from a wire agency feed without modifications to the text.

Know your inner investor Do you have the nerves of steel or do you get insomniac over your investments? Let’s define your investment approach.
Take the test
Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less

Recommended For You

Trending Stocks

×
Get alerts on WhatsApp
Set Preferences My ReadsWatchlistFeedbackRedeem a Gift CardLogout