Suyash Chaudhary, head of fixed income at Bandhan AMC, told Abhishek Kumar in an email interview that the situation arose due to tariff effects for America Uncertain, but it is a bit clear for India as inflation is under control here. Chaudhary says that India’s government bonds are becoming attractive due to strong economic development and expectations of fiscal discipline.
India’s debt market is largely saved from global trading pressure. What is the reason for this and can this situation persist?
The so -called ‘American exception’ theme seems to be somewhat weak due to the weakening of the dollar. The theme had attracted more allocation for dollar assets over the years. The weakening of the theme is good news for India and other emerging markets as it reduces pressure on local currencies. Because of this, the Reserve Bank of India (RBI) now has more autonomy in monetary policy. Due to the effect of tariffs, the balance of growth and inflation is somewhat troublesome for the US, but it is better for India.
How are you looking at the growth-inflationary scenario? Do you expect the rate cut to continue?
Except for any weather pressure on food prices, India’s inflation scenario looks very soft to a great extent. The RBI forecast has also said that inflation will remain around the target level in the coming year. Economic growth is likely to remain strong, but global factors may lead to some cyclical obstacles in short term.
It is expected that RBI will have enough scope to respond to this cyclic decline. The central bank is actively managing liquidity for compatible inclusion of cuttings.
Despite deepening uncertainty, you are excited on long -term bonds. Is it right to take a risk?
Given the weakening of the dollar and the scope of local monetary policy, the possibility is positive for bonds. We hope that the government will retain a vigilant fiscal attitude, even if there is a slight increase in losses if there is a decrease in tax revenue. Such fiscal discipline will increase the attraction of Indian bonds.
What is your response to corporate bonds and state development loans (SDL)?
From our perspective, the movement of corporate bonds has lost its glow and now it is in normal state. This has helped to increase the allocation in mid-duration segments (up to five years). SDL also looks good for the intermediate period of six-seven years. But for a long period, we still give priority to the government bond curve as we find the demand-supply scenario more favorable in the mid-term.
What schemes would you like to suggest investors in terms of two-three years period?
The first priority for investors should be reducing regeneration risk. Such changes can be made through the selection of the appropriate duration to correspond to the ability to take risk and investment period. Mainly, mid-term funds (for example three-six years of maturity) may be sufficient.
First Published – May 1, 2025 | 10:40 pm IST
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