See bond yields in 8.25-8.60% range ahead: Experts

In an interview to CNBC-TV18, Chaitanya Pande, head-fixed income, ICICI Prudential MF and Shobhit Mehrotra, senior fund manager and head of credit, HDFC AMC, speak about the impact of the rate cut on bond yields.
  • Language
  • App
  • Subscriptions
  • Specials
  • Sign-In
  • Register
GeStepAhead GrowMyMoney
moneycontrol.com

Home » News » Mutual Funds » MF-Interview

Apr 18, 2012, 02.25 PM | Source: CNBC-TV18

See bond yields in 8.25-8.60% range ahead: Experts

In an interview to CNBC-TV18, Chaitanya Pande, head-fixed income, ICICI Prudential MF and Shobhit Mehrotra, senior fund manager and head of credit, HDFC AMC, speak about the impact of the rate cut on bond yields.

Like this story, share it with millions of investors on M3

See bond yields in 8.25-8.60% range ahead: Experts

In an interview to CNBC-TV18, Chaitanya Pande, head-fixed income, ICICI Prudential MF and Shobhit Mehrotra, senior fund manager and head of credit, HDFC AMC, speak about the impact of the rate cut on bond yields.

Post Your Comments

Share Cancel

Chaitanya Pande, Head-Fixed Income, ICICI Prudential MF
Yesterday, the Reserve Bank of India (RBI), in its annual monetary policy for 2012-13, slashed the policy rates by 50 basis points.

In an interview to CNBC-TV18, Chaitanya Pande, head-fixed income, ICICI Prudential MF and Shobhit Mehrotra, senior fund manager and head of credit, HDFC AMC, speak about the impact of the rate cut on bond yields.

Below is the edited transcript of the interview with CNBC-TV18's Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying videos.

Q: What did you takeaway from the policy? Do you see the yields softening further from this level of 8.31%

Pande: RBI has definitely surprised everybody with a 50 bps cut. Hardly anybody expected 50 bps. I think he has fired a good first salvo. Now where markets will go from here will be driven more by what the government does in terms of its fiscal deficit commitments. Given the fact that they haven’t raised petrol prices, the deficits already are looking a little unsustainable. I think 8.25-8.30% is sustainable for the moment. But the next move will have to come of what the government does.

Q: After the Budget, a lot of people were fearing that yields might go up all the way to 9%. Do you think those expectations need to be tempered, you have got a cap which is lower than that for the bond yield?

Mehrotra: Yes, definitely. I think 8.74% was the recent high, which we saw on 10-year government bond. To my mind, even reaching 8.74% looks difficult at this point of time. We have seen over the last few days that RBI has intervened in the bond markets. So that has helped cap the yields and that would also not allow 10-year bond yields to spike up. So, to my mind the range of 8.25% to 8.60% looks where the market should trade in.

Q: Do you concur with that or do you think that later part of the year if the market becomes tight once again because the governments borrowing programme, we might see this range shifting higher again?

Pande: For the moment, I think it will hold. As I mentioned the borrowing programme number without a petrol price hike looks like another Rs 56,000 crore extra borrowing may come. So, if we don’t see a petrol price hike soon, I guess this range could be busted slightly on the upside.

Q: What are you penciling in terms of the next three-four months in the June and July meetings? Do you think there will be any more good news for the bond market or you think it’s unlikely after what the RBI said and the range that you indicated will probably stretch through July-August?

Mehrotra: Yes, I think to expect further rate cuts in the first half look difficult. A lot depends on growth and inflation numbers which will come out over the next one-two months.

Unless and until growth really surprises on the downside and along with inflation also not rising, only then there would be some case for further rate cuts. But to my mind second half is when I would look for further rate cuts and may be at best 50 bps for the entire fiscal.

1 2
Buy, Hold, Sell ? Hear it first on M3
See bond yields in 8.25-8.60% range ahead: Experts

See all

Get started using your favorite social network

or

Login using moneycontrol ID

Username
Password

Need help logging in? Reset password.

Don´t have an account? Sign Up

Get started using your favorite social network

or

Simply sign up using this short form

* mandatory

UserName*

Username should be atleast 4 character

Password*

Password should be 8 or more characters,
atleast 1 number, 1 symbol & 1 upper case letter

Alert

Your Password should contain
  • 8 or more characters
  • At least 1 number
  • At least 1 symbol
  • At least 1 upper case letter
Confirm Password*
Email
Already have an account? Login