New Delhi, June 28 -- It was always talked about that India's premium valuation, subdued corporate earnings growth in 2025-26, and lack of AI-led growth weighed on FII sentiment towards the domestic market. However, one less-discussed factor has been the rise in global bond yields, which has also reduced the relative attractiveness of Indian assets. Foreign investors have not only stayed away from Indian equities but have also shown caution towards the domestic debt market. This has been one of the key reasons behind the sharp depreciation of the rupee, which weakened by Rs.10 against the US dollar over the past year to 94 today, a 12% fall in 12 months.

The real return offered by INR bonds is not lucrative enough considering the underly...