India – The SIGMA signal remains bearish

Standard Chartered notes:

Our India Government Bond (IGB) positioning indicator (SIGMA) for May remained at -5.00, unchanged from April's level, providing a bearish signal for duration in June. 

On our scale, -5.00 indicates the maximum position of accumulated net selling by active investors in the past six months. 

In May, the intensity of net-selling of IGBs by foreign banks decreased, but that of primary dealers increased. Domestic mutual funds remained net buyers of IGBs. 

We maintain a Positive outlook on IGBs on favourable near-term supply dynamics and reduction in long IGB positions. For June, IGB redemptions exceed planned issuance by INR 82bn.