Societe Generale (OTC:SCGLY) SA anticipates a significant decrease in India's 10-year bond yield by approximately 100 basis points by the third quarter of 2024. The French multinational banking and financial services company's forecast is based on an expected $25 billion foreign inflow as a result of India's sovereign debt being included in JPMorgan Chase & Co (NYSE:JPM).’s emerging market index.
This influx of foreign capital, which is viewed favorably for addressing India's fiscal and current account deficits, is predicted to be bullish for Indian bond yields. As a result, yields are projected to decrease from Tuesday's rate of 7.22% to a level similar to that of November 2021, which was at 6.30%, by Q3 2024.
This forecasted reduction in India's 10-year bond yield is significant, as it indicates increased confidence in India's economic stability and growth prospects. The inclusion of India's sovereign debt in the JPMorgan Chase & Co.’s emerging market index is seen as a major factor driving this positive outlook.
The potential $25 billion foreign inflow is likely to provide a substantial boost to the Indian economy, helping to alleviate fiscal and current account deficits. This development could also make Indian bonds more attractive to investors, further driving down yields as demand increases.
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