With reference to Foreign Portfolio Investment (FPI) trends in Indian government bonds, consider the following statements: 1. FPIs sold ₹49,355 crore worth of Indian government bonds since August 2026. 2. Bloomberg included local debt in its indices during the reporting period. 3. The US 10-year treasury yield reached 4.81%. Which of the statements given above is/are correct?

FPIs sell Indian bonds worth ₹987 crore since August

GS3Economy · S&T · Environment · Security· Capital markets & SEBI· Prelims· 9 September 2026

Capital flows and yield differentials: a GS3 case study on debt market volatility.

Why in news

Foreign Portfolio Investors (FPIs) sold ₹987 crore worth of Indian government bonds since August, a sharp reversal from the robust purchases seen in June and July.

Background

FPIs sold ₹987 crore in Indian government bonds since August 2026. This follows purchases of ₹49,355 crore in June and July. The US 10-year treasury yield reached 4.81%, narrowing the yield differential with Indian rates.

Facts for Prelims

FactFPIs sold ₹987 crore worth of Indian government bonds since August 2026
FactFPIs purchased ₹49,355 crore in Indian government bonds during June and July
FactUS 10-year treasury yield reached 4.81% as of the reporting period
FactBloomberg deferred the inclusion of local debt in its indices

Prelims practice question

With reference to Foreign Portfolio Investment (FPI) trends in Indian government bonds, consider the following statements:

FPIs sold ₹49,355 crore worth of Indian government bonds since August 2026.
Bloomberg included local debt in its indices during the reporting period.
The US 10-year treasury yield reached 4.81%.

Which of the statements given above is/are correct?

(a)1 only
(b)2 only
(c)3 only
(d)1 and 3 only

Show answer

Answer: (c) 3 only — Statement 3 is correct. Statement 1 is incorrect: FPIs sold ₹987 crore since August; ₹49,355 crore was the purchase amount in June and July. Statement 2 is incorrect: Bloomberg deferred the inclusion of local debt in its indices.

For Mains

Q. Analyze how fluctuations in global yields and international index inclusions influence the volatility of capital flows in the Indian debt market.

Dimensions to cover in your answer

Yield differential compression: Narrowing gap between US and Indian yields reducing the attractiveness of Indian sovereign debt
Index dependency: Vulnerability of domestic bond markets to the inclusion/exclusion decisions of global agencies like Bloomberg

Keywords: Capital Flows · Yield Differential · Foreign Portfolio Investment · Sovereign Debt · Market Volatility

Read the full news →Source: Economic Times ↗Also: GS2 · Policies of other countries affecting India

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This note is generated automatically from SatyaDheesh's news feed and mapped to the UPSC CSE syllabus. Check facts against the original report or PIB before using them in an answer.