Investors should keep a budget before buying 10-year bonds: LIC Mutual Fund’s Singh | Jobs Vox

Indian fixed income investors should wait for the Union Budget announcement before venturing into longer-dated government bonds, after which the benchmark yield of 7.40% will be an attractive entry point, a fund manager at LIC Mutual Fund said on Friday.

India’s finance minister is expected to present the country’s annual budget to parliament on February 1.
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“Benchmark bond yields should trade in the range of 7.20%-7.40% till March,” said Rahul Singh, vice president and senior fund manager, fixed income funds at LIC Mutual Fund. The size was “attractive”.

“Once the markets begin to expect price cuts to come, the yield will decrease. As an investor, I enter these levels and do not exit,” he said. India’s benchmark 7.26% 2032 bond yield was at 7.28%, largely unchanged for the month, after easing 17 basis points in November.

“I would be more interested in the two-year to three-year corporate bond curve as it is now, and after the final rate hike and the budget is done, it will be time to invest in the 10-year portion of the curve.” Singh said.

The Reserve Bank of India is expected to go for another rate hike in February, taking the reserve ratio to 6.50%, a longer hold.

Longer pauses help investors earn higher returns, Singh said.

In the year The RBI hiked the rate by 225 basis points as inflation remained above the tolerance level of 6 percent in 2022 for the 10 months to October.

Singh did not expect any negative surprise in the 2023-2024 budget and was looking at a net borrowing of around 10 trillion rupees ($120.82 billion) in 2023-2024.

“Next year, if there is a chance of a downturn, the 10-year bond will make more sense in terms of capital appreciation,” the fund manager said.

Singh also said the 7.40% rate for the 10-year bond is attractive even though there has been no strong rally in the bond markets for some time, investors can look to the five-year curve for gains after the budget. advertisement. ($1 = 82.7650 Indian Rupees)