A short -term and increased strategy better placed in the middle of abundant liquidity, says Devang Shah of Axis MF
While the recent upgrade evaluation provides feelings, Shah believes that its impact on corporate bonds and foreign tides will be included than transformation.
He added that the structural rally in long bonds takes place widely, so tactical allocation and recognized portfolio key placement for fixed investors. Modified excerpts –
Q) Could this upgrade lead to the re-training of Indian corporate bonds, and if so, which segments or industries are likely to be most beneficial?
A) Upgrading the evaluation is slightly positive for the bond market because it increases the investor’s feeling. However, it is not expected that there will be a significant influx directly to the government bonds /corporate bonds.
Indian businesses have already operated at the level of investment level, so the incremental benefit in terms of reduced loans costs is limited.
For corporate debtors who increase Fundshore, the upgrade will reduce the cost of loans by 20-25 basis points and provide some relief.
Nevertheless, the overall impact is expected to be more incremental than transformation
Q) What changes can the income that investors expect in foreign capital on the debt market expect after this upgrade?
A) It is expected that foreign capital flows on the Indian debt market are expected to see a positive but slight impact after the rating upgrade. While the upgrade provides a positive sense of feeling, the real driver of the demand with demand is located elsewhere. One of the nail concerns included a weak sample demand for structural change. In addition, OMO programs, which were the main liquidity providers last year, have stopped largely and the FPI experienced clean sales recently. These factors on the side side on the side of the side contributed to greater disagreement with the bond market and upgrade.
Thus, while a foreign tide can gradually increase with an improved market feeling, it is unlikely that it would get dramatically immediately after the upgrade.
Investors should also note that the conditions for liquidity in the system remain strong and support short -term assets of more than long -term bonds and that wide macroeconomic factors such as fiscal consolidation and inflation trajectory will be more strongly influenced by foreign.
Q) After the status quo from RBI, you see further reduction in rates in the rest of FY26 and why?
A) We compare with the current attitude of the central bank policy. Due to the absence of the importance of economic injury and the consideration of the cumulative reduction of the 100 basis points that has been implemented, RBI is well placed to maintain a neutral approach.
With operational rates, which have already been alleviated by 150 BPS, any further cuts can be limited to only one more or two at best if the growth of surprises at a disadvantage.
In our opinion, at the other end of the cycle we reduce rates and further reduced rates of 25 basis points would have a limited impact of undercut conditions of liquidity.
This means that we continue to believe that interest rates are likely to remain low for the duration of the extension.
Q) How should investors face a fixed yield portfolio when reducing the rate and geopoly concerns?
A) The consequences of elevated tariffs guarantee cautious, with key macroeconomic variables – if the dynamics of currency, capital streams and developing business relationships – requiring careful monitoring.
As the governor correctly noted, the transfer of monetary policy works with delay and must be allowed to play fully. While interest rates are likely to remain lower for a long time, the structural rally in long bonds seems to take place largely.
This means that tactical opportunities offering 10-15 foundations can still occasionally. Customers may consider searching for abundant liquidity and low rats against the background of the yield and short -term capital evaluation in short dolch and increased strategies.
(Resistance of responsibility: recommendations, suggestions, opinions and opinions provided by experts are their own. These do not apply to views on economic times)
(Tagstotranslate) Devang Shah