By:– Akhil Mittal, Senior Fund Manager, Fixed Income, Tata Asset Management
” The RBI’s December policy decision was the key driver for debt markets, with the rate cut coming broadly in line with expectations.OMO purchase announcements supported the bond market, but continued pressure on the rupee kept short-term yields volatile. As we move into January, markets will focus on how the RBI manages currency stability and liquidity, along with any signals on further OMO purchases and cues from the Union Budget. Over the medium term, with inflation remaining benign and liquidity conditions expected to stay comfortable, we expect yields to stabilise and gradually move lower over the next few quarters. In this environment, short-duration funds up to one year are well placed, while longer-duration and gilt funds continue to offer value for investors with a medium-to-long-term perspective who can navigate near-term volatility.”
