Nippon India Dynamic Bond Fund

Over the past few months fixed income markets witnessed a slew of events with continued liquidity support from RBI, announcement of additional gross market borrowing by central government, new 10 Yr G-Sec auction, fiscal stimulus package and finally the bi-monthly monetary policy.

- Prashant Pimple

Fixed Income Market Update:

Over the past few months fixed income markets witnessed a slew of events with continued liquidity support from RBI, announcement of additional gross market borrowing by central government, new 10 Yr G-Sec auction, fiscal stimulus package and finally the bi-monthly monetary policy.

Going forward in Q2 FY 2021, adaptability and flexibility will define the new normal to acclimatize to constantly changing domestic & global dynamics. From a market’s perspective, an accommodating policy stance with easy liquidity conditions is expected to persist for a sufficiently long period. Market is confident of timely RBI support in the form of conventional and unconventional measures to assuage market apprehension and provide financial stability. With the demand-supply situation under control, ample liquidity, benign international crude oil prices as well as lower global bond yields, we will continue to see robust demand in fixed income assets going ahead.

Factors to consider in current market:

• Liquidity & Safety are two important criteria one should look for before investing in a market like this, where the only certain thing is uncertainty!!

• G-Sec & SDL of markets are the most liquid and the safest in terms of credit profile.

• From a Risk-Return perspective, G-Secs / SDLs are may be attractive. Annualized yields of SDL & G-Secs are higher than Bank FD rates. In addition, the bonds may provide marked-to market appreciation in a bond-positive environment.