The 10-year benchmark 7.18% 2033 bond yield was at 7.1100% as of 10:00 a.m. IST, after closing at 7.1443%, while the liquid 7.18% 2037 bond yield was at 7.2286% after ending at 7.2606% on Thursday.
The yields had eased to 7.0717% and 7.1784%, respectively, earlier in the day.
“The wait is finally over. India’s inclusion effort has borne fruits, and that is leading the fall today,” a trader with a primary dealership said. “Still, since the actual flows are some time away, the rally is capped.”
The inclusion will begin on June 28, 2024, and extend over 10 months with 1% increments on its index weighting, JPMorgan said, adding that India is expected to reach the maximum weighting of 10%.
The widely tracked index will include a total of 23 government securities, currently placed under the category of Fully Accessible Route (FAR) where there is no cap on foreign investment.
A review from another index provider, the FTSE global bond index, is due before the end of this month. Emkay Global said the current move does not immediately pave the way for inclusion in the FTSE and Bloomberg indexes, which have stringent conditions such as foreign investor taxation, Euroclear settlement and capital controls.
Traders added that markets may be ignoring other factors such as elevated oil prices and jumping U.S. yields for the time being.
The 10-year U.S. yield hit 4.50% for the first time in over 16 years on worries over higher-for-longer interest rates.
Traders also await fresh debt supply, as New Delhi aims to raise 330 billion Indian rupees ($3.98 billion) via the sale of bonds, which includes 140 billion rupees of the benchmark paper. ($1 = 82.9250 Indian rupees) (Reporting by Dharamraj Dhutia; Editing by Janane Venkatraman)
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