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What The Global Bond Indices Inclusion Means For Indian Economy: Motilal Oswal's Take

What Would The Inclusion In Global Bond Indices Mean For The Indian Economy?: Motilal Oswal's Take

Visitors look at screens displaying stock indices at the Tokyo Stock Exchange. (Photographer: Akio Kon/Bloomberg)
Visitors look at screens displaying stock indices at the Tokyo Stock Exchange. (Photographer: Akio Kon/Bloomberg)

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Motilal Oswal Report

The noise around the inclusion of India’s sovereign bonds in global bond indices is growing stronger.

In this note, we discuss our views on the likely impact of such an inclusion on India’s domestic bond yield, the Indian Rupee, and economic growth.

Assuming ceteris paribus, the impact of the inclusion is pretty straightforward.

Higher demand for Government of India securities would raise prices, lower bond yields, and strengthen the rupee.

With a lower risk-free rate, it would have the potential to reduce the cost of borrowing across borrowers.

Nevertheless, there would be no ceteris paribus and hence the actual impact would not be so straightforward.

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Motilal Oswal Ecoscope Global.pdf

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