Global banks are biggest bulls in India’s bond market

Foreign banks have emerged as the largest investors in India’s trillion dollar sovereign bond market recently, attracted by the nation’s economic prospects and a stable currency.

They’ve bought more than 500 billion rupees ($6 billion) of debt since June 1, according to data from the Clearing Corp of India. That far exceeds about 200 billion rupees of net inflows into index-eligible bonds in the period, and suggests global banks that typically buy as clients’ custodians have also been snapping them up for their own accounts.

The scale of purchases by these custodian banks, such as Deutsche Bank AG and HSBC Holdings Plc, reflects their optimistic outlook on India, following its inclusion into JPMorgan Chase & Co’s emerging-market bond index at end-June.