The demand for Indian equities in Japan has risen to a high. The assets of Nomura Holdings’ India equity fund quadrupled to about USD 3.6 billion (400 billion yen) in the past year.

At the end of June, Japanese investors owned Indian stocks and bonds worth $13 billion — the highest since 2012, Bloomberg quoted India’s regulator.

“It’s not like we put in any special marketing effort for this fund,” Kazuto Wada, an executive director at Nomura, told Bloomberg. “Investors are looking at where the growth will be in the medium to long term, without having to worry about short-term swings in the market.”

The prime reason for the increasing attraction of the Japanese towards the Indian market is the high economic growth. The expansion rate of the Indian market is seven times that of its Japanese counterpart, which is seeing a stagnation in the past few decades. Compared to the India's 10-year bond yield, which is at 6.43 percent, Japan's counterpart yields 0.07 percent.

In addition, the optimism that the markets have shown for the market-friendly policies of Prime Minister Narendra Modi, too, have led to the buoyancy.

According to Wada, India's reforms are "showing tangible progress" with its economy growing at 7 percent annually. “Growth in advanced economies is slowing.”