Rate cuts, index inclusion likely to help bond prices rally in FY25

Followed by the lower borrowing, the calendar for the initial half of the financial year gave another cheer to the bond market

A combination of factors — index inclusion, rate cuts and fiscal prudence — could boost the bond market in financial year 2024-25 (FY25), market participants said.

In addition, the Reserve Bank of India’s (RBI’s) continued efforts to maintain orderly liquidity conditions in the banking system would give a further fillip to the bond market.

In September 2023, JPMorgan announced the inclusion of India's bonds into the JPMorgan Government Bond Index-Emerging Markets (GBI-EM).

Subsequently, on March 5, 2024, Bloomberg Index Services revealed that Indian government bonds would be added to its Emerging Market Local Currency Government Index from January 31, 2025.