Bloomberg defers India gilt inclusion, spooks investors

MUMBAI: A decision by the Bloomberg Index Services to defer inclusion of Indian govt securities in its global bond index led to a spike in gilt yields, affecting investor sentiment on Dalal Street that pulled down stock prices and also the rupee in early trades Tuesday. At close, however, bonds, sensex and the rupee recovered early losses, and closed flat to marginally lower.

The 10-year benchmark gilts closed at a yield of 6.63%, up by three basis points (100 basis points = 1 percentage point) from Monday's close at 6.60%.

Sensex, which was down over 600 points in early trades, recovered late to close 250 points lower at 83,628 points. In the interbank forex market, the rupee, which had weakened to 90.33 to the dollar in mid-session, closed at 90.19, down by 8 paise from its Monday close at 90.11.

The early slide in bond prices, sensex and the weakness of the rupee came after a Bloomberg story said that the Bloomberg Index Services held back its decision to add Indian govt securities to its Global Aggregate Index, "citing investor request for further evaluation."

The index services company will provide further updates on the inclusion of Indian gilt in its index by mid-2026, the report said. "The delay comes at a time when India's fully accessible route bonds have seen record outflows, and many market participants were expecting the inclusion to come this month."

In the stock market, the day's selling was led by the foreign funds again. End-of-the-session data on BSE showed that while foreign funds were net sellers at Rs 1,500 crore, domestic funds were net buyers at Rs 1,182 crore. So far in 2026, foreign portfolio investors (FPIs) have net sold stocks worth Rs 15,509 crore (about $1.7 billion). The day's slide also left investors poorer by Rs 1 lakh crore with BSE's market capitalisation now at Rs 467.8 lakh crore.

Among the 30 sensex stocks, 19 closed lower. Among these, Reliance Industries and L&T contributed the most to the index's loss on Tuesday. On the other hand, buying in ICICI Bank and Eternal helped cushion the fall to some extent.