Foreign ownership of India's global index bonds crosses 3 trillion rupees before rate cut
Foreign inflows might see a further rise amid "an aggressive rate cutting cycle on growth/trade headwinds and well-behaved inflation as well as a stable currency," said Sabrina Jacobs, senior client portfolio manager, emerging market fixed income at Pictet Asset Management.
On April 9, the Reserve Bank of India (RBI) is expected to cut its policy rate for the second time since February. The overnight index swap markets have started pricing in far more aggressive rate cuts.
Interest rate cuts would lead to a drop in bond yields, resulting in capital gains.
With just one session to go before the fiscal year ends, foreigners have bought 124 billion rupees of bonds in the last two weeks of March, up from the 40 billion rupee purchase in the first two weeks, data showed.
Most bonds under the Fully Accessible Route (FAR), which allows investments outside of capital-flow limits, are included in global bond indexes. Overseas holding of these notes has doubled in the last 14 months, with the ownership rising to nearly 7% as of March 27.
The two-year and eight-year papers are most preferred, with foreign ownership at 15.3% and 14.7%, respectively.
Meanwhile, Manish Bhargava, CEO of Straits Investment Management, sees a cumulative rate cut of 50-75 basis points this year.
There has been an increase in inflows in bonds given the RBI is widely expected to cut rates by 25 basis points next month, he added.
India's retail inflation had dropped to a seven-month low of 3.61% in February.
($1 = 85.6100 Indian rupees)
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
16 minutes ago
- Reuters
Japan's core inflation slows in June but stays above BOJ target
TOKYO, July 18 (Reuters) - Japan's core inflation slowed in June due to temporary cuts in utility bills but stayed above the central bank's 2% target, highlighting lingering price pressures that will keep alive market expectations for further interest rate rises. The data will be among factors the Bank of Japan (BOJ) will scrutinise at its next policy meeting on July 30-31, when the board is expected to revise up its inflation forecast in a quarterly review of its projections. The nationwide core consumer price index (CPI), which excludes volatile fresh food costs, rose 3.3% in June from a year earlier, government data showed on Friday, matching a median market forecast. The rise was smaller than the 3.7% increase in May due largely to the resumption of fuel subsidies aimed at helping households weather the pain from higher living costs. A separate index that strips away both fresh food and fuel costs - closely watched by the BOJ as a measure of domestic demand-driven prices - rose 3.4% in June from a year earlier after increasing 3.3% in May. The BOJ exited a decade-long, radical stimulus programme last year and raised short-term interest rates to 0.5% in January on the view that Japan was on the cusp of sustainably hitting its 2% inflation target. While the central bank has signalled its readiness to raise rates further, the economic impact of higher U.S. tariffs forced it to cut its growth forecasts in May and complicated decisions around the timing of the next rate increase. Japan's economy shrank in the first quarter as rising living costs hurt consumption. Exports fell in May for the first time in eight months, stoking recession fears. A slight majority of economists in a June Reuters poll expected the BOJ to forgo another rate hike this year.
Reuters
5 hours ago
- Reuters
Ukraine offers its front line as test bed for foreign weapons
WIESBADEN, Germany, July 17 (Reuters) - Ukraine will let foreign arms companies test out their latest weapons on the front line of its war against Russia's invasion, Kyiv's state-backed arms investment and procurement group Brave1 said on Thursday. Under the "Test in Ukraine" scheme, companies would send their products to Ukraine, give some online training on how to use them, then wait for Ukrainian forces to try them out and send back reports, the group said in a statement. "It gives us understanding of what technologies are available. It gives companies understanding of what is really working on the front line," Artem Moroz, Brave1's head of investor relations, told Reuters at a defence conference in Wiesbaden, Germany. Moroz said there has been strong interest in the scheme, but did not name any companies that have signed on to use it and declined to go into more detail on how it would operate or what, if any, costs would be involved. More than three years after their invasion of Ukraine, Russian forces are pressing a grinding offensive across the sprawling, more than 1,000-km (620-mile) front line and intensifying air strikes on Ukrainian cities. Ukraine is betting on a budding defence industry, fuelled in part by foreign investment, to fend off Russia's bigger and better-armed war machine. Brave1 - set up by the government in 2023 with an online hub where Ukrainian defence companies can seek investment, and also where Ukrainian military units can order up arms - had drawn up a list of the military technologies it wanted to test, Moroz added. "We have a list of priorities. One of the top of those would be air defence, like new air defence capabilities, drone interceptors, AI-guided systems, all the solutions against gliding bombs," he said. Unmanned systems in the water and electronic profile systems on the ground are also on Ukraine's list of priorities, as are advanced fire control systems or AI guidance to make howitzers more accurate.
Reuters
6 hours ago
- Reuters
US set to impose 93.5% tariff on graphite from China, Bloomberg News reports
July 17 (Reuters) - The United States Commerce Department is set to impose preliminary anti-dumping duties of 93.5% on graphite imported from China after concluding the materials, which are a key component for batteries, had been unfairly subsidized, Bloomberg News reported on Thursday. Reuters could not immediately verify the report.
