Some notable research snippets of the week
JPM Bond Index inclusion (YES Bank) JP Morgan included India's government bonds to its Government Bond Index-Emerging Markets Index (GBI-EM) and assigns the highest weight of 10% in the index. The inclusion will be phased over 10 months, starting from 28 June 2024 to 31 March 2025. We expect the cumulative flows to India to be ~ USD 30 bn, considering USD 23.6 bn flows through passive investments, topped up with investments from some active funds. The new entity on the demand side would be in addition to recent large investments by non-bank entities in the G-sec market, thereby potentially leading to demand exceeding supply of G-sec fresh issuances in any particular year. India 10Y bond yields could fall to 6.45%-6.55% in FY25, assuming a 75bps cut in the repo rate in FY25. However, we are not expecting any meaningful impact on USD/INR as RBI could be seen creating additional buffers to mitigate risks of larger potential outflows in the event of risk aversions. India gets the i...