India 10-year yield at 7.48% may not draw foreign funds
India's 10-year government bond yield rose to 7.48%, pushing the spread over the US 10-year Treasury yield to around 251 basis points, its highest level in four months.
This bigger gap might catch the eye of foreign investors looking for better returns, but experts like Venkatakrishnan Srinivasan, Director, Rockfort Fincap LLP, point out that it doesn't guarantee more money will flow into India.
Stable currency vital after 3L/cr outflows
The main reasons for the widening gap are rising Indian yields (thanks to worries about interest rates and oil prices) and stubbornly high US yields due to their own fiscal issues.
But here's the catch: foreign investors care most about risk-adjusted returns, including currency swings and hedging costs.
With over ₹3 lakh crore already pulled out of Indian stocks in the last 10 months, stable currency conditions are key if India wants to win back global investors.