MUMBAI, June 28 Reuters India39;s rupee rose slightly, while government bonds were unable to gain meaningfully on the day of the muchawaited inclusion of the country39;s sovereign debt into a widelytracked JPMorgan debt index as inflows underwhelmed investors.

Early on Friday, the rupee touched a peak of 83.3675 against the U.S. dollar and ended 0.1 higher at 83.3825. The benchmark bond yield was marginally higher at 7.01.

Foreign exchange market indicators had pointed to inflows, likely due to passive funds buying bonds, but multiple market participants said the quantum of inflows was sharply lower than anticipated. Traders had been betting on inflows of up to 2 billion spread over Thursday and Friday.

By 400 p.m. IST on Friday, traders said a maximum of 40 billion rupees 480 million may have come into government bonds.

In the previous session, bonds under the socalled fully accessible route, which will be added to the JPMorgan emerging market debt index, saw a net purchase of around 120 million by foreign investors.

The market expected passive investors to jump in on the first day to minimise tracking error, Deepak Sood, senior partner and head of fixed income at Alpha Alternatives, said.

However, it seems that the flows will pick up gradually as most investors need to rebalance their portfolios. We are confident that the momentum will increase in coming days.

India39;s inclusion in the JPMorgan index was announced in September, setting the stage for billions…