Govt Bond Yield Remains Stable in India Tracking US Peers, JPMorgan Hints USD 25 billion Inflow: Know Bond Market Outlook

Bond Market OutlookJP Morgan signalled that non-resident holdings of India Government Bonds (IGBs) will double in one year, from the current 2.5 percent of outstanding to over 4.4 percent, as the accessibility of the IGB market improves. The inclusion of Indian bonds in the index in June is expected increase demand from foreign investors by increasing the bond prices and lowering the yields.Market analysts are keen on the outcomes of the forthcoming Union Budget in July. Fiscal deficit targets, economic reforms, and borrowing plans remain their focus, as a fiscally disciplined budget could help drive down bond yields.Meanwhile, in the RBI minutes released on Friday, two external members of the six-member monetary policy committee (MPC) of the Reserve Bank of India (RBI) have strongly advocated for cutting down the policy repo rate. As the next MPC meeting is scheduled from August 6 to August 8, 2024, debt market participants are keen on the outcome because if one more member favours rate cut, the casting vote of RBI governor will be called for.

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