Yields Higher Following Global Trend

Yields higher across the curve, following the trend of bonds globally, while higher equity markets in India have accelerated the sell off.

• Downside is tempered by the announcement from FTSE Russel that India will be placed on the watch list for potential reclassification of its market accessibility level, and will be considered for inclusion in the FTSE Emerging Markets Government Bond Index. India's market accessibility will be reviewed for reclassification to "1" from "0," which would put them at the minimum level needed for inclusion. The announcement will facilitate increased investment flows in the long term, and in the short term could see the Indian government exercise more fiscal discipline. The prospect of greater foreign investment will be a welcome one for the Indian government, inflows will help ease the burden of the deficit. However, the timeline is unclear, China was added to the WGBI but will be phased in over 36 months. As a note, it was reported earlier in March that India's inclusion in the index was put on hold over tax demands by Indian money managers.
• Indian markets were closed for the Holi festival yesterday, exchange fata showed state banks sold a net INR 3.75bn of Indian bonds on Friday, though these were more than offset by foreign inflows which saw net buying of INR 11.6bn.
• Eight states including Maharashtra, Karnataka and Punjab have reported a high number of daily COVID-19 cases and account for 84.5% of the 68,020 new daily cases in the past 24 hours. The number of coronavirus cases remains elevated in India, some 12m cases have been confirmed. There have been a total 60.5m vaccine doses administered, it is estimated at the current pace of vaccinations it will take around 3 years to vaccinate the entire population with two doses. Trials of Novavax vaccine have started, with a view to rolling it out by September.