(Bloomberg) -- Foreign investors are returning to rupee-denominated bonds as India’s inclusion in JPMorgan Chase & Co.’s emerging-market debt index approaches.

Overseas investors bought about $358 million of bonds on Monday, the most in two months and a seventh successive day of purchases, data compiled by Bloomberg show. That took net purchases for May to $709 million after $1.9 billion of sales in April amid a global risk-off that spurred outflows from emerging markets.  

India has been top of mind for global investors this year as the inclusion of the nation’s debt in JPMorgan’s flagship gauge in June heralds its growing clout, with the US bank estimating inflows of as much as $25 billion. A reduction in short-term borrowings and a record dividend payout by the central bank have also boosted the appeal of local bonds. 

READ: Indian Bonds Best Asia Bet for JPMorgan Asset Before Inclusion

The buying has been largely in government bonds with index-eligible bonds seeing inflows of $320 million this month after outflows of $1.2 billion in April, separate data from Clearing Corp. of India show.

The yield on the benchmark 10-year bond has eased by more than 20 basis points from this quarter’s high reached in April to 7.02% on Wednesday.

“Favorable supply and demand dynamics, proactive liquidity management, moderating inflation, and a stable currency bode well for a sustained decline in yields,” Barclays Plc strategists including Mitul Kotecha wrote in a note.

--With assistance from Subhadip Sircar.

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