Listen to this article
Debt markets in December witnessed some easing of yields both domestically and internationally. This was primarily due to pausing of interest rates by central banks globally, which hints at the possibility of rate cuts in future.
Let’s see what the industry experts have to say as we step into the new year.
Alok Singh, Chief Investment Officer, Bank of India MF
- Markets may stay at present level in the near term and the outlook is neutral
- Market may be driven mainly by supply side equation for Indian bonds, upcoming budget, and the impact of inclusion of Indian bonds in global indices
- 10- year G-sec range may be between 7.15 and 7.20%
- Shorter end curve looks a bit elevated because of inadequate liquidity
- With current market situation, it will be good to have some duration in the portfolio. For medium term, short durations funds are preferable
Anurag Mittal, Head of Fixed Income, UTI MF
- Bond market will depend on global and domestic inflation
- FPI flows may provide near term positivity and support to the market
- 10-year G-sec rate to hover around 7-7.25%
- Short end of the yield curve could be slightly volatile because of high credit demand in January to March period
- For investment horizon of more than 12 months, moderate duration funds like short term funds, corporate bonds funds are recommended. For short term (up to 12 months), ultra short duration funds or low duration funds are recommended.
Dwijendra Srivastava, Chief Investment Officer, Fixed Income, Sundaram MF
- Short term portfolio flows and long term FDI could aid the liquidity but currency circulation due to India’s general elections and slowdown in government spending could reduce liquidity
- Money market rates are likely to stay elevated
- 10 year-G sec rate is expected to move around 7.10 - 7.30%
- For the short end of the curve, rates are expected to move down due to quarter ending phenomenon but post that they are expected to be range bound
- For investors looking for short term investment, ultra short and low duration funds are recommended and investors with long-term investment horizon (12- 18 month), mid duration funds are preferable
Prashant Pimple, Chief Investment Officer, Fixed Income, Baroda BNP Paribas MF
- The global economy is expected to post soft economic growth with disinflationary impulses kicking in which will start a much softer interest rate environment
- Banking system liquidity is expected to be positive going forward as government is seen to spend its surplus balance before the onset of elections
- The 10 year-G-sec is expected to trade in the range of 7- 7.25%
- Dynamic bond fund and gilt funds can be recommended to investors with a horizon of around 1-2 years and short-term income fund for an investor with 6 months- 1 yr horizon.
