FPI investments in FAR securities steadily rise over 10% since bonds enter JP Morgan index

Investments by the foreign portfolio investors (FPI) in government securities under the Fully Accessible Route (FAR) has shot up over 10 percent on a monthly basis since the Indian bonds entered the JP Morgan index.

“As Fed starts cutting rates, which looks quite imminent in the current month, spreads may widen further as US treasury yields are expected to fall more than the Indian government bonds during reversal and wider spreads could influence capital flows between markets,” said Mataprasad Pandey, vice-president of Arete Capital Service.

FPI investment in FAR securities stood at Rs 2.30 lakh crore as on August 31, up 11.62 percent month-on-month, and from Rs 2.06 lakh crore as on July 31, according to the Clearing Corporation of India (CCIL) data.

On June 28, JP Morgan included 29 Indian government securities under FAR in its emerging market index. India carries a 1 percent weight in the index, with planned incremental increases each month until March 2025.