Bond Market Outlook
After a year of robust inflows, a change in sentiments of Foreign Portfolio Investors (FPIs) came about and they sold around Rs 2,669 crore worth of government bonds this week. In the previous week in April, they had withdrawn Rs 6,174 crore from the debt market.
Market Experts feel that the recent FPI outflow is driven by strong economic data from the United States and an increase in US bond yields, which reduced the attractiveness of emerging-market debts. They expect this selling pressure to continue marginally but anticipate that the market will stabilise after the inclusion of Indian bonds in the JPMorgan bond index in June. Till then there may be some outflow, as there is currently no compelling reason to buy, but outflow is likely to be minimal.
The inclusion of Indian government bonds in JP Morgan’s index starting from June 2024, is projected to attract USD 20 to 40 billion in the next two years. This could…
