Unlocking the Potential of Indian Bonds: A New Era of Growth
Indian bonds are gaining traction, and FY25 is expected to be a transformative year for the bond market. With recent regulatory changes and inclusion in global indices, the potential for growth is immense.
Indian BondsFixed Income InvestmentsRetail InvestorsSebiJp MorganBloombergGrip InvestReal EstateJul 04, 2024
Nikhil Aggarwal, Founder and CEO of Grip Invest, believes that this is a defining moment for the bond market, akin to the launch of the zero-brokerage model in equity. He expects the bond market to witness multi-fold growth in the coming years, driven by enabling regulations, robust tech infrastructure, and high-quality issuers.
Fixed-income investments, such as bonds, offer predictable returns and are a vital component of a diversified investment portfolio. They provide a hedge against the volatility of the stock market and offer predetermined returns on a predetermined schedule. When investing in bonds, it is essential to evaluate the quality of credit associated with a bond, with AAA-rated bonds being considered the safest.
The Indian bond market offers a range of fixed-income options for retail investors, including bank FDs, government bonds, corporate bonds, and commercial real estate. The recent regulatory reforms have led to the fractionalization of fixed-income investments, making it more accessible to retail investors.
The inclusion of Indian bonds in global indices is expected to attract significant inflows from foreign portfolio investors (FPIs). This increased demand for bonds is likely to result in higher bond prices over time, benefiting existing Indian investors. The ideal bond portfolio for new retail investors should be tailored to their age, income, and risk profile, with younger investors considering a larger allocation to equity and high-yield bonds, and older investors opting for government bonds and high-rated corporate bonds.
As the Indian economy continues to grow, the bond market is expected to play a vital role in attracting capital and providing investment opportunities for retail investors. With the right combination of regulations, technology, and investment options, the Indian bond market is poised for significant growth in the coming years.
Frequently Asked Questions
What is the impact of Sebi's decision to lower the face value of listed bonds?
The decision is expected to attract more retail investors to the bond market, increase trading volume, and enhance liquidity.
Why should investors choose fixed-income investments?
Fixed-income investments provide predictable returns, are not correlated with stock markets, and offer a hedge against volatility.
What are the different fixed-income options available for retail investors in India?
Bank FDs, government bonds, corporate bonds, and commercial real estate are popular fixed-income investment options available to retail investors.
How will the inclusion of Indian bonds in global indices impact yields and returns?
The inclusion is expected to result in higher bond prices over time, benefiting existing Indian investors, and boost liquidity, creating a better investing environment.
What is the expected inflow into Indian bond markets?
Market participants estimate that $20 billion will flow into Indian bonds in the next 12 months from FPIs.
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