Experts bet high on investment in the Indian bond market
World growth expectations have taken a decided turn towards the worse over the past month or so. This is now reflected in expectations of easing by major central banks later in the year.
On account of the gap between sovereign and AAA getting reduced and quality rates gaining focus of the foreign institutional investors (FIIs), the investment experts are betting high on the investment into the Indian bond market. As developments continually highlight, they say, the lower rated credit markets are far from settled and the spreads that can effectively be captured there may not yet be compensating for the risks involved.
Betting high about the Indian bond market Suyash Chaudhary, Head – Fixed Income, IDFC AMC said, "World growth expectations have taken a decided turn towards the worse over the past month or so. This is now reflected in expectations of easing by major central banks later in the year. While currently, the expectation would be for one last rate cut alongside continued easy liquidity, this can very quickly change towards expecting a deeper further easing should the global outlook further deteriorate. From a bond market standpoint, the focus should remain on quality rates (sovereign, SDL, AAA) as preferred vehicles to play the current macro environment. As developments continually highlight, the lower rated credit markets are far from settled and the spreads that can effectively be captured there may not yet be compensating for the risks involved."
Standing in sync with the IDFC AMC views Harsh Jain - COO & Co-Founder, Groww said, "The international investors were very vocal about the need for a stable government. FII investment in the debt category had been very volatile in the months of April and for the most part of May. After the declaration of the results in the last week of May, inflows into debt have been mostly consistent. Now all eyes are on the government's upcoming fiscal budget on July 5 presented by the new Finance Minister Nirmala Sitharaman. The government is expected to announce its plans to speed up the Indian economy. The government also comfortably met its fiscal target of 3.4%. The gap between the sovereign and AAA has been reduced. With a stable government and a new budget, the upcoming months look bright for fresh investments for quality bonds (AAA, sovereign, SDL)."