Indian investors face critical week with announcements on bonds, government’s borrowing plan

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Mumbai: Indian investors face a crucial week with announcements due for a major index review for the country’s bonds and the government’s borrowing plan for the next six months.

FTSE Russell will announce its annual review for equity and fixed-income markets on Thursday, with Indian debt already on a watch list for possible upgrades. While the government is yet to say when it will announce its next lending programme, officials of the central bank and finance ministry will decide the plan on Monday, people familiar with it have said.

“This week will set the ground for the second half of the year, and could be a turning point for the markets,” said Madhavi Arora, principal economist, Emkay Global Financial Services Ltd in Mumbai. “Bond index inclusion could be a game changer for India, which attracts massive foreign inflows.”

The rupee is down nearly 1% so far this month, and is one of Asia’s worst performers, as the Fed’s bullish pivot strengthened the dollar, even as the Reserve Bank of India He kept his easy stance. A possible inclusion by FTSE Russell could pave the way for large foreign inflows and burn the rupee and bonds.

Looking at the currency pair’s slow stochastics, a momentum indicator, the rupee appears to be poised for more near-term losses against the greenback, indicating that it is still not in oversold territory against the dollar. However, any further losses could be limited by looking at the initial rupee support near the 74 level.

Indian bonds are already heading for biggest monthly gains since April, and could get a further boost if the government decides to deduction Borrowing for the second half of the financial year as revenue improved.

Earlier this month a finance ministry official said the country has completed most of the work required to be part of the global benchmark, after which a rise in the index looks more imminent.

India, expected to be included in the global bond index by early 2022, according to Morgan Stanley, could attract an inflow of $250 billion over the next decade, expected to shrink from 6.18% in 2022 to 5.85% in the 10-year period. Watches bond yields. on Friday. According to HDFC Securities Ltd, the move could push the rupee higher by over 1.5% to 72.50 per dollar.

Indian bonds are also being reviewed for inclusion by JPMorgan Chase & Co, which usually assesses its index this month, while Bloomberg Index Services Ltd said last week that there are currently none. estimated timeline India’s inclusion in the Bloomberg Global Aggregate Index.

Dilip Parmar, Analyst, HDFC Securities said, “Index inclusion” could be a major trigger, which could lead to a rally in the rupee. “The central bank may not be too aggressive in buying or selling the dollar, and may give the rupee time to adjust to the market.”

Bloomberg News’ parent, Bloomberg LP, is also the parent company of Bloomberg Index Services Ltd., which manages competing indexes with other providers.

Here are the key Asian economic data this week:

• Monday, September 27: Taiwan Industrial Production
• Tuesday, September 28: Australia retail sales, China industrial gains, South Korea consumer confidence, Malaysia trade balance
• Wednesday, September 29: Bank of Thailand rate decision
• Thursday, September 30: China Manufacturing, Non-Manufacturing PMI and Caixin Manufacturing PMI, Australia Building Approvals, New Zealand Business Trust and Building Permits, Japan Retail Sales and Industrial Production, South Korea Trade Survey and Industrial Production, Indian 2Q BoP Current Account Balance, Thailand Business and Current Account Data
• Friday, October 1: Japan 3Q Tankan Survey and Manufacturing PMI, Australia Home Loans, New Zealand Consumer Confidence, South Korea Business Data, Indonesia CPI, Thailand Business Sentiment-bloomberg

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