India's bond market started the year by logging the highest-ever foreign inflows in the first two months. This momentum is mainly fuelled by the domestic gilt inclusion in the JPMorgan Bond Index and the government's aggressive fiscal deficit target for the upcoming year.Foreign inflows into Indian debt stood at Rs 42,256 crore so far this year, with Rs 19,837 crore in January and Rs 22,419 crore in February, according to the data from the National Securities Depository Ltd. February saw the highest monthly inflow in over seven years, while the previous highest was seen in June 2017 at Rs 25,685 crore. Since the announcement of Indian government bonds in the JPMorgan emerging-market index in September last year, the debt market has seen an inflow of over Rs 81,800 crore. Key TriggersJPMorgan Chase & Co. said it would add Indian government bonds to its benchmark emerging-market index, which is set to begin in June 2024, with a weight of 1%, increasing 1% each month until it reaches 10% by April 2025. It is expected to lead to $30 billion of inflows into its government bond market, with monthly inflows of $3 billion during the inclusion period.In another boost to domestic bonds, Bloomberg Index Services has also proposed to include Indian bonds in its emerging market local currency indices, starting in September 2024.The government's aggressive stance on the fiscal deficit front has also been a positive catalyst for the market. Bond market participants foresee yields in government securities tapering off with higher inflows.FPIs Outflow In Equity MarketInflows in the debt market show a sharp contrast against the foreign inflows in the equity market. While debt has seen an inflow of Rs 42,256 crore this year, FPIs sold equities worth Rs 24,205 crore during the same period. Their aggregate holding in Indian stocks fell to a decadal low by the end of January 2024, according to ICICI Securities Ltd.The NSE Nifty 50 has risen over 2% since the beginning of the year. FIIs are being completely neutralised by the sustained buying of domestic institutional investors as well as retail exuberance.FPI inflow into the country will double to 1% of GDP, aided by strong forex reserves and the inclusion of domestic bonds in global indices, CLSA said in a note.CLSA On Why FPI Inflows Will Double To 1% Of GDP