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Day after Modi win, global investors pumped in $216 mn into Indian bonds

Modi's re-election put to rest any uncertainty about a diverse group of political parties coming to power at a time when growth is already slowing

Kartik Goyal & Ragini Saxena | Bloomberg 

The stimulus package announced by China and the optimism around the US-China trade agreement has further bolstered FPI sentiment towards emerging markets (EMs) as a whole
Foreign funds “have no choice but to look at India now,” said Lakshmi Iyer, chief investment officer for debt at Kotak Mahindra Asset Management Co

piled a net $216.3 million into on Friday, the day after Prime Minister Narendra Modi’s sweeping election victory.

The second-biggest daily inflow in two months turned into net buyers of rupee-denominated notes for May, signaling the debt’s appeal may be rising as wagers grow that the Reserve Bank of India will soon add to its two interest-rate cuts this year.

Modi’s re-election put to rest any uncertainty about a diverse group of political parties coming to power at a time when growth is already slowing. The benchmark 10-year yield slipped as much as seven basis points to reach 7.16% on Monday, the lowest since April 2018, with traders citing overseas demand as a reason for the rally in bonds.

“have no choice but to look at India now,” said Lakshmi Iyer, chief investment officer for debt at Kotak Mahindra Asset Management Co. “If your forwards are bearable and yields are high, that is when they make a nice and attractive carry,” she said.

The yield could touch 7% if the RBI’s June policy is positive for bonds, she said.

First Published: Tue, May 28 2019. 09:59 IST
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