Mumbai: India’s 10-year sovereign bonds rose on speculation the country’s incoming government will take steps to revive the economy and curb inflation. The Bharatiya Janata Party (BJP) and its allies won 336 of the 543 seats up for grabs in the parliamentary election, more than the 272 needed for a majority, poll results showed last week. The BJP, led by Narendra Modi, secured 282 seats, the biggest electoral victory for a single party since 1984, enabling it to pursue an agenda without being constrained by coalition politics. Overseas funds pumped $404 million into Indian local-currency debt last week through 15 May, exchange data show. “The formation of a stable, pro-investment government is a welcome development for the bond markets,� Rohit Arora, a Singapore-based strategist at Barclays Plc, wrote in a research note dated 16 May. The Indian government bond markets, which are broadly untapped by foreign investors, could see increased inflows as the key uncertainty is removed. The yield on the 8.83% notes due November 2023 fell two basis points, or 0.02 percentage point, to 8.82% as of 10:25am in Mumbai, prices from the central bank’s trading system show. “The 10-year benchmark yield will fluctuate between 8.6% and 8.9%, with the possibility of a break lower,� Arora wrote without specifying a time frame. Indian sovereign debt was also supported by gains in the rupee, which rose 0.5% on Monday and strengthened beyond the 58.50-per dollar level for the first time since June 2013. A stronger currency helps cool inflation as India imports about 80% of its oil. Aberdeen Asset Management Plc, Mirae Asset Management Co. and Nomura Holdings Inc. predict the currency will extend its world-beating rally last week as the election verdict boosts confidence. One-year interest-rate swaps, derivative contracts used to guard against swings in funding costs, dropped four basis points to 8.5%, data compiled by Bloomberg show. Bloomberg

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