Foreign inflows to Indian bonds set for highest in 6 years over index call

By Ronojoy Mazumdar

Foreign inflows to Indian bonds this year are poised to reach the highest since 2017, as investors lap up local debt before the nation’s entry into global indices. 

Inflows to fixed income, including corporate debt, have reached nearly $6 billion thus far in 2023, with this month alone accounting for about a quarter of the flows, according to data compiled by Bloomberg.

Monthly inflows to the nation’s government bonds are set for their highest since April 2020, the longest streak since the fully-accessible route index-eligible category was introduced.

While JPMorgan’s decision in September to add India to its emerging market gauge is prompting investors to boost their holdings of local bonds, robust growth in company earnings and the economy has driven foreign inflows to nation’s equities. Global funds have bought more than $12 billion of shares this year, the most in emerging Asia.