Nifty PSU Bank index rallies amid JP Morgan’s inclusion of Indian bonds in EM index

The Nifty PSU Bank index saw a surge in trading activity on Friday, following JP Morgan’s announcement to include Indian government bonds in its benchmark emerging-market index. The index opened at 5,094.70 and touched an intraday high of 5,231.85 and low of 5,089.80. Despite market volatility during the week, the Nifty PSU Bank index rose over 3%, suggesting a prevailing optimistic sentiment among traders.

On Monday, September 18, the Nifty PSU Bank index increased by almost 5%, hitting a record high of 5,292 with eleven of the twelve index components setting new 52-week highs.

JP Morgan’s decision to incorporate Indian bonds into its emerging-market index is seen as a significant development for India’s economic landscape. The inclusion, scheduled to take effect on June 28, 2024, will allow India to hold a maximum weight of 10% in the index. This move is expected to attract substantial foreign investments into India’s debt market and grant global investors increased access to the world’s fastest-growing major economy.

The Nifty PSU Bank sector emerged as the top-performing segment on Friday morning, while sectors like pharma and metals experienced declines. SBI was the leading gainer within the Nifty Index while Sun Pharma found itself at the bottom of the sector performance rankings.

Despite the market experiencing its most substantial weekly decline in seven months, breaking a three-week streak of gains, the announcement from JP Morgan led to a noticeable surge in buying activity among PSU banks. The Sensex registered a 0.33% dip, settling at 66,009.15, while the Nifty 50 followed suit, closing down by 0.34% at 19,674.30.

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