Aditya Birla Sun Life Asset Management Company believes that the inclusion of India in JP Morgan’s indices amid a favourable economic backdrop provides an opportunity for investors seeking stable returns in emerging markets.
The convergence of macroeconomic stability, potential rate cuts, and innovative investment products like the ETF will position India as a compelling destination for fixed-income investments in the coming years.
Kaustubh Gupta, Co-Head of Fixed Income, Aditya Birla Sun Life AMC, said as global markets navigate uncertainties, India’s emergence as a beacon of stability and growth in the bond market underscores its growing importance on the global stage.
India was recently included in JP Morgan’s local currency Emerging Market Bond Indices, marking a pivotal moment for the country’s financial landscape.
The inclusion in the index is expected to bring an incremental influx of $20–25 billion into Indian government bonds over the next 9–12 months. With India holding the highest weight of 10 per cent in the index tracked by investors managing $236 billion of assets, it will attract significant attention from global investors.
India continues to maintain its status as the fastest-growing major economy globally, supported by a favourable macroeconomic environment marked by declining core inflation and expectations of stabilized food prices with a normal monsoon forecast.
RBI is anticipated to initiate a favourable interest rate environment, potentially cutting rates by up to 50 basis points over the next 12 months. This prospective easing cycle aligns with broader global trends, particularly as the US Federal Reserve contemplates similar actions. Such developments could enhance the attractiveness of Indian bonds, particularly as global investors seek alternatives to markets like Russia and China, said Gupta.
Recognising the growing demand for sovereign exposure among investors, Aditya Birla Sun Life AMC has introduced the Aditya Birla Sun Life CRISIL Broad-Based Gilt ETF. The fund will focus on the most liquid on-the-run government securities across the yield curve and offers a streamlined approach to capitalising on potential capital gains in the bond market.