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India’s trillion-dollar bond market braces for foreign capital boost

India's trillion-dollar bond market braces for foreign capital boost
© Reuters

India’s sovereign bond market, valued at a trillion dollars, is set to witness a significant inflow of foreign capital. This development comes in the wake of JPMorgan Chase & Co. (NYSE:)’s decision to incorporate Indian debt into its emerging market indices.

The multinational banking corporation disclosed this strategic move last week, assigning a maximum weightage of 10% to India in its primary emerging market index. The inclusion process will begin progressively from June 2024.

Financial forecasts predict that this decision by JPMorgan could attract over $20 billion in inflows. This substantial influx of new capital is expected to alleviate concerns about fund availability within the bond market and provide a boost to the Indian Rupee.

The impending foreign capital is anticipated to play a crucial role in stabilizing the supply-demand dynamics within the bond market and offer robust support to India’s currency. The move by JPMorgan is therefore expected to have a significant impact on the strength of India’s bond market and its national currency.

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