Foreign investors directed a record $5.2 billion into Indian government bonds in June, marking the strongest monthly inflow in 15 months.
The surge in sovereign debt demand has helped cushion the Indian market against a concurrent wave of equity outflows, signaling a distinct rotation in foreign capital allocation toward fixed income.
The shift underscores a broader recalibration of risk appetite in emerging markets.
As global oil prices cooled and geopolitical tensions in the Middle East thawed, the risk premium on Indian assets narrowed.
Investors appear to be prioritizing the yield and relative safety of sovereign bonds over equities, which have faced selling pressure from global portfolio rebalancing.
This capital flow dynamic highlights the sensitivity of Indian markets to external macro drivers.