Reaction on RBI Policy by Pankaj Pathak, Quantum Mutual Fund
Below are Views On Reaction on RBI Policy by Pankaj Pathak - Fund Manager - Fixed Income, Quantum Mutual Fund
This seems like a mix of hawkish monetary policy and supportive market action. RBI's concerns over inflation was clearly reflected in the governor's statement. This along with the fact that the RBI has given up on the time based forward guidance to keep monetary policy accommodative, indicate that course of monetary policy could change sooner than expected. We expect that the RBI could start hiking policy rates towards end of this year.
On the other hand the commitment to buy government bond under the GSAP is a good move to support the long term bond yield. this will support long term bond yields in near term. But medium term trajectory will depend more on the policy outlook.
Investors should expect gradual rise in bond yields over medium term We also expect very high volatility in interest rate going forward.
Dynamic bond funds could be an option for investors with long time horizon and higher risk appetite. Conservative investors should stick to liquid funds.
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