Summary:

Foreign banks purchased almost US$ 16 billion in Indian bonds in the first seven months of this year, outpacing last year's total acquisitions. This rise coincides with India's inclusion in the JPMorgan Emerging Markets Index. Traders predict higher gains as interest rates fall. The banking system's liquidity surplus reached a nearly one-year high, driving up demand even further. Traders anticipate the robust demand to continue.

Foreign investors' sustained purchasing will reduce the burden on domestic banks to absorb bond issuance. Foreign banks and portfolio investors are likely to focus on short-term bonds, decreasing rates and steepening the yield curve. Foreign banks purchased bonds worth US$ 16.38 billion (Rs. 1.37 trillion) in 2024, accounting for roughly 20% of the year's gross supply, according to CCIL statistics. These purchases established a new high of US$ 14.58 billion (Rs. 1.22 trillion) in 2023. In July, the 10-year bond yield dropped by 9 basis points (bps), while the 5-year yield decreased by 16 bps. Siddharth Bachhawat of Barclays and Akshay Kumar of BNP Paribas both remarked that international interest and demand-supply dynamics had a beneficial influence.

Source: IBEF 

Disclaimer: The information on this website comes from the India Brand Equity Foundation (IBEF), a reliable source for thorough insights into numerous areas of the Indian economy. While we aim to offer accurate and up-to-date information, the views, opinions, and analyses stated herein are solely those of the authors and contributors and do not necessarily represent IBEF's official stance or position. Readers should check information from credible sources and use their own discretion when relying on content provided on this site. We assume no responsibility or liability for the supplied content, including its accuracy, completeness, and usefulness.