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Foreigners are buying Indian bonds massively


June, 07 2024
watermark Economic news

Foreign investors are showing increased interest in Indian sovereign debt securities ahead of their inclusion in the key JPMorgan bond index. High profitability and the economic potential of the country make them attractive.


Global investors began buying Indian government bonds even before the announcement of the results of the national elections, ignoring concerns about the possible continuation of the policy of Prime Minister Narendra Modi. Over the past week, the volume of purchases by foreign investors of bonds eligible for indexation reached 50 billion rupees ($599 million), despite a slight drop in their value after the announcement of the election results, where Modi narrowly won.


The inflow of foreign investments can bring tens of billions of dollars to the country. This highlights both the importance of the Indian economy for investors and the attractiveness of the high yield of its debt securities.


Some investors downplay concerns about Modi's party's influence on financial discipline and currency stability, preferring to «buy on the fall» in anticipation of double-digit profits in the coming years. The measures planned by the Modi government for digitalization, urbanization and infrastructure development are also contributing to the country's rise.


UBS Group AG predicts a slight decline in the yield of India's 10-year sovereign bonds from the current slightly over 7% to 6.5% next year, but without significant changes in growth prospects or the trajectory of fiscal consolidation.


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