Debt fund managers are increasingly embracing government bonds due to favourable demand-supply dynamics ahead of their inclusion in global bond indices, along with improvements in the macroeconomic landscape and easing inflation.
“The demand-supply situation is well-managed, given the addition of new demand forces and lower-than-expected supply of bonds. The Reserve Bank of India’s (RBI’s) liquidity policy also seems to have changed, with some easing observed. Directionally, we all see headline inflation remaining lower than it was six to seven months ago,” said Rajeev Radhakrishnan, chief investment officer (CIO)-fixed income at SBI Mutual Fund (MF).
