Inclusion of Indian bonds in JPMorgan bond index to have limited impact on Indian bonds, rupee, says ASK Wealth

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ASK Wealth Advisors Private Limited. "The inclusion into bond indices is good to have, feeds incrementally into the “Bharat shining" narrative. It’s also a good sandbox regulatory experiment for RBI, to manage monetary policy while losing some policy-making flexibility.

However, there is no material impact on bond yields. The determining factor for that will be global, especially US policy rates," said ASK Wealth Advisors in a note. As Mint reported earlier, JPMorgan will include Indian government bonds in its widely tracked emerging market debt index which may lead to inflows of billions of dollars into India.

India's local bonds will be included in the Government Bond Index-emerging markets (GBI-EM) index and the index suite, benchmarked by about $236 billion, in global funds. Many experts hailed this development and said bond investors will have more options now for investments. It will also pave the way for the bond market to grow its roots in India.

Moreover, it is also positive news for the domestic currency as it will lower India’s cost of funding and help India finance its fiscal and CAD or current account deficit. Also Read: How will the inclusion of Indian government bonds in the JPMorgan EM debt index impact rupee, bonds? Here's what experts say ASK Wealth Advisors has a contrarian view. The financial firm believes this inclusion is good for sentiment but may not have a material impact on bond yields and the Indian rupee.