Arvind Chari, Head-Fixed Income & Alternatives, Quantum Advisors
"RBI left the repo rate unchanged at 6.25 per cent despite lowering its inflation outlook and GDP growth projections. There seems to be a greater concern on global oil and commodity prices and thus it indicates to us that there is now a higher bar on further rate cuts by the RBI. The change in stance from accommodative to neutral suggests to us that we might have actually reached the end of the rate cutting cycle.
But with the change in stance, we do not expect bond yields to fall and in fact the 25 bps sell off seen today is indicative of the fact that the best time in the bond markets is behind us. Investors would do well to lower their return expectations from bond funds."
