Indian Bonds Complete Weekly Gain as Investment Cap Under Review

Indian bonds completed a weekly gain after central bank Governor Raghuram Rajan said regulators will soon review foreign investment limits for government debt.

Overseas institutional investors have almost exhausted the $30 billion cap imposed in 2013. Above-average monsoon rainfall and a retreat in oil prices have helped ease concerns about inflation and boosted demand for bonds, according to PNB Gilts Ltd. in New Delhi.

“The markets are drawing comfort from the fact that raising the FII limit is now just a matter of time,” said Vijay Sharma, executive vice president for fixed income at PNB Gilts. “Lower oil prices, easing worries over a deficient monsoon and Greece are feeding into each other.”

The yield on the May 2025 notes fell two basis points for the week and one basis point Friday to 7.80 percent in Mumbai, prices from the central bank’s trading system show.

Seasonal showers have been seven percent above normal since June 1, according to the weather bureau, which forecasts the June-September monsoon rainfall to be 88 percent of a 50-year average.

The government sold 150 billion rupees ($2.4 billion) of notes Friday, including 60 billion rupees of 10-year debt, according to an RBI statement.