Morningstar Expects JP Morgan Bond Listing In 2024 To Amplify Capital Infows In Indian GSecs

American financial services firm, Morningstar believes that India's entry into JP Morgan's Emerging bond markets will amplify further capital inflows into Indian bonds. However, the research company did not give any absolute figures for inflows in Indian government securities. Nevertheless, the majority of experts have similar opinions.

In a conference held in Mumbai on Tuesday, Kunal Kapoor, CEO of, Morningstar Inc said, "According to our recent Morningstar Global Investor Experience report, India emerges as one of the most transparent markets, providing investors with valuable insights, especially in terms of monthly holdings data and mandatory disclosure of managers' deferred compensation."

Kapoor added, "This transparency has not only attracted foreign institutional investors, seeking alternatives to China but is also bolstered by India's robust growth narrative, driven in part by its youthful demographic and supportive government initiatives."

In a positive trajectory, he added, "global emerging market APAC managers are increasingly favouring India, with average allocations rising significantly in the past year."

Accordingly, he said, "The upcoming inclusion of India in the JP Morgan Emerging Market Bond Indexes in 2024 is anticipated to further amplify capital inflows into Indian bonds."

As per JP Morgan, Indian GSecs will be added to the GBI-EM Global index suite, effective from June 28, 2024. It is expected to reach the maximum weight of 10% in the GBI-EM Global Diversified Index (GBI-EM GD).

Currently, there are 23 Indian government bonds with a combined notional value of $330 billion which are eligible for the index. However, the inclusion of the GSecs will be staggered over 10 months through March 31, 2025 (i.e., the inclusion of 1 per cent weight per month), JP Morgan had highlighted.

The immediate consequence of this inclusion is the anticipation of passive inflows as index-tracking funds increase their holdings in Indian bonds. Early estimates predict these inflows to range between USD 25-30 billion in the first year alone. This substantial influx of funds could have profound implications for India's fixed-income market.

Additionally, the Morningstar CEO believes that the relative stability of the rupee against the dollar in comparison to the previous year adds to the appeal.

Finally, he concluded, "As we navigate this information-rich market, our focus as advisors remains on three crucial elements: cost reduction, leveraging technology for client engagement, and incorporating behavioural coaching to empower both novice and seasoned investors."