Indian Bonds: JP Morgan will add government bonds to its emerging-market index

In a big boost to India's debt market, JP Morgan Chase & Co is set to add Indian government bonds to its benchmark emerging-market index. This will drive significant foreign fund inflows to the debt market.

The Indian bonds will be added to the JP Morgan Government Bond Index-Emerging Markets from June 28, 2024. India will have a maximum weight of 10% on the index, said a statement.

The firm's global head of index research, Gloria Kim in the statement said that the move follows the Indian government’s introduction of bonds that can be fully owned by foreigners in 2020, as well as steps to aid foreign portfolio investments

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As per Bloomberg, the decision is the latest sign of India’s growing appeal to international investors as the country’s economic growth outstrips peers, its geopolitical influence grows and global companies including Apple Inc. look for alternatives to China. Inflows into the Indian bond market have been picking up in the recent year's and the country's assets have proven resilient to financial turbulence that has roiled other developing-nations. This, even though foreigners play a small role in the Indian bond market.

When the trading begins, the Indian bond yields and swap rates will slide. The rupee has also strengthened 0.4% against the dollar in offshore trading. As per Bloomberg, Foreign investors have bought $3.5 billion worth of Indian government debt this year