Home Business Government of India bonds of 1-5 years mature for medium term gains:...

Government of India bonds of 1-5 years mature for medium term gains: Report

The benchmark 10-year bond yield was 7.40 per cent. (file)

Mumbai:

Government of India bonds with tenures of one to five years are poised for medium term gains at current levels, said a fixed income official at LIC Mutual Fund.

Marjaban Irani, Chief Investment Officer-Debt, LIC Mutual Fund said, “Short-end is already at its peak and is unlikely to rise from current levels. Rate hikes and tight liquidity conditions have already been relaxed. , especially at the low end.” ,

“The current levels look attractive especially for the one-year to five-year portion and should lock funds into these areas.”

The benchmark 10-year bond yield was 7.40 per cent while the liquid five-year bond yield was 7.30 per cent, with a spread of 10 basis points (bps).

The spread turned negative at the end of September, but has since recovered as market participants expect the Reserve Bank of India to reach terminal interest rates sooner than previously.

The yield on one-year to four-year bonds ranged from 6.75% to 7.27%.

Irani said, “Obviously the yields are going to fall on the short end and whether we buy at 7.25% or 7.45%, we know these levels are going to go down in the medium term. So, the objective is to catch the big move. Irani said.

The fund manager said that while the 10-year benchmark yield could rise to 7.60%- or 7.70%-level due to supply pressures, the yields for five-year maturities were at a peak.

Marzban Irani expects the RBI to halt rate hikes after a 35-bps hike in December and the Federal Reserve to provide relief after rate hikes in November and December.

“We do not expect the (Indian) central bank to go for more than one rate hike. Even if it goes for another rate hike after December, bond yields may not respond as much as we did with the September policy. Saw it later.”

RBI has raised rates by 190 bps to 5.90% since May to fight inflation that has remained above its 2%-6% target for nine consecutive months from September. The Fed has raised rates by 300 bps since March.

(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)

RELATED ARTICLES

Ashneer Grover, Madhuri Jain summoned in legal battle with BharatPe

<!-- -->Ashneer Grover resigned from BharatPe in March. (file)New Delhi: The Delhi High Court today issued summons to former BharatPe MD Ashneer Grover...

Air India’s $400 million upgrade includes premium economy area

<!-- -->Air India said it has engaged JPA Design to assist with the cabin interior design. (File)Mumbai: Full-service carrier Air India today said...

Inox GFL Group raises Rs 1,500 crore, moves towards zero net debt

<!-- -->Rs 740 crore was raised through the IPO of Inox Green Energy Services. (File)Noida: Inox GFL Group on Thursday said it has...

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Most Popular

Former Prime Minister Manmohan Singh honored with ‘Lifetime Achievement Honor’ in Britain

London: Former Prime Minister Dr. Former PM Manmohan Singh has been honored with 'Lifetime Achievement Honour' by 'India-UK Achievers Honours' in London for...

Pathan’s success is victory over BJP’s negative politics: Akhilesh Yadav

<!-- -->Several Hindu rights activists called for a boycott of the film. (file)Lucknow: Samajwadi Party chief Akhilesh Yadav on Tuesday termed the success...

“It’s Completely…”: Suryakumar Yadav On Pitch After Hardik Pandya’s ‘Shocker’ Remark | cricket news

India's T20 vice-captain Suryakumar Yadav on Tuesday played down the Ekana Stadium pitch controversy, saying the wickets don't matter a lot and they are...

‘Taarak Mehta Ka Ooltah Chashmah’ again in controversy, Shailesh Lodha left the show in April, still not received the fees

'Taarak Mehta Ka Ooltah Chashmah' has once again become a topic of discussion. Actually, according to the report, the makers have not yet...

Recent Comments