Debt-fund managers have drastically cut allocation to government securities (G-secs) over the past six months. At the end of April, debt-mutual funds (MFs) held government paper worth Rs 1.13 lakh crore, 8.9 per cent of debt assets under management (AUM). Six months ago, debt MFs’ G-secs holding stood at Rs 1.62 lakh crore — nearly 14 per cent of debt AUM. The pruning of exposure to G-secs owes itself to the belief that the interest rate cutting cycle by the Reserve Bank of India (RBI) is nearing an end.
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