Back and How
“The long term case for India is appealing,” said Bryan Carter, London-based head of emerging-markets
debt at BNP Paribas Asset Management Ltd. “India has already fired the first easing shot, so expectation is naturally for more.”
The yield on India’s most-traded sovereign debt due January 2028 has fallen from this year’s high of 7.67 per cent in February to 7.48 per cent on Friday. That on notes maturing in April 2020 slipped 15 basis points in March to 6.42 per cent.
Rupee government and corporate debt lured $2.4 billion last month through March 27, versus $1.4 billion for Indonesia. Indian stocks took in $4.3 billion during the period, contributing to making the equity-sensitive rupee the region’s best performer over the past month.
“India benefited because of the shift in RBI’s stance and OMO bond purchases as well as the rupee’s strength,” said Patrick Wacker, fund manager for emerging-markets
fixed income at UOB Asset Management Ltd. in Singapore.
Modi’s strong response to the border situation with Pakistan appears to have boosted his popularity. At least four opinion polls conducted in March showed the current ruling coalition led by the Bharatiya Janata Party can either cross or get close to a majority in the 543-seat Indian lower house.
Voting will take place in seven phases between April 11 and May 19. Official results will be out on May 23.
“Capital inflows into India have been driven by higher odds that Modi and BJP will be able to form a government, secure a second term after the elections,” said Roland Mieth, emerging-markets portfolio manager at Pacific Investment Management Co. in Singapore. Indian bonds will continue to attract inflows due to a more dovish Federal Reserve and with the RBI looking to ease policy, he said.