JPMorgan's inclusion of Indian bonds to benefit all asset classes, says Ritesh Jain

Jain says inclusion in this global benchmark is a major win for India, as it attracts a significant pool of global capital for bond allocations, leading to increased foreign exchange inflows.

JPMorgan's inclusion of Indian bonds in its emerging-market index will enhance Indian macroeconomic conditions and boost the appeal of assets, including equities, Ritesh Jain, co-founder of Pinetree Macro and a strategic advisor, said.

The inclusion in the widely tracked global benchmark is a major win for India, as it attracts a significant pool of global capital for bond allocations, leading to increased foreign exchange inflows, he said.

This supports the rupee and broadens the buyer base for Indian bonds, enhancing demand diversification. Stable bond yields and a steady currency would positively impact economic fundamentals, making assets, including equities, more attractive, Jain added.

Early on September 22, JPMorgan Chase & Co said it plans to add Indian government bonds to its benchmark emerging-market index, potentially attracting billions in foreign investments to India's debt market.

Starting June 28, 2024, these securities will be part of the JPMorgan Government Bond Index-Emerging Markets, with India's maximum weight capped at 10 percent.

JPMorgan said 23 Indian government bonds with a combined notional value of $330 billion are eligible. All fall under the category of “fully accessible” for non-residents, news agency Reuters said.

The inclusion comes after the government introduced the FAR program in 2020 and implemented significant market reforms to support foreign portfolio investments, Gloria Kim, the global head of index research at the firm, said.

A survey of benchmark investors revealed that nearly three-quarters of them were in favour of India's inclusion in the index.