India's Bond Index Moment Falters as Foreign Inflows Stall

What's holding back India is a currency that has been left behind as Asian peers strengthen against the dollar

- Bloomberg

India's breakthrough into global debt markets is in need of a second act. Foreign investors have bought a net $20 billion of the nation's index-eligible sovereign debt after JPMorgan Chase & Co. announced India's inclusion to its benchmark emerging market index in 2023. Recent outflows have left total investments on the low end of estimates by analysts.

This year's underperformance is stark given how emerging markets everywhere benefited from a 'Sell America' trade that spurred reallocations by investors. A Bloomberg index tracking the performance of EM local currency debt hit a record high in June, while other Asian nations from South Korea to Malaysia have seen renewed interest from funds.