In January, foreign portfolio investors (FPIs) infused more than Rs 19,800 crore into India's debt market, marking the highest monthly inflow in over six years. This surge can be attributed to the inclusion of Indian government bonds in the JP Morgan Index. Concurrently, FPIs withdrew Rs 25,743 crore from Indian equities last month due to the rising bond yields in the United States.

Data from depositories reveals that FPIs registered a net investment of Rs 19,836 crore in the debt markets during January. This figure represents the highest influx since June 2017, when FPIs injected Rs 25,685 crore into the market. Preceding this, FPIs had contributed Rs 18,302 crore in December, Rs 14,860 crore in November, and Rs 6,381 crore in October.

Himanshu Srivastava from Morningstar Investment Research India highlighted the robust net inflows of $2.4 billion into Indian fixed-income markets in January. This positive trend is attributed to the inclusion of Indian government bonds in the JP Morgan Index. In September of the previous year, JP Morgan Chase announced the addition of Indian government bonds to its benchmark emerging market index, effective from June 2024.

The landmark decision is expected to bring substantial benefits to India, attracting an estimated $20-40 billion in the next 18 to 24 months. This influx is anticipated to enhance the accessibility of Indian bonds for foreign investors, potentially strengthening the rupee and contributing to overall economic growth.