Key Points
Lakshmi Iyer, CEO-Investment & Strategy, Kotak Alternate Asset Managers, says the yield curve is likely to remain elevated for some more time..
Also, if you look at the FOMC narrative, which is higher for longer, all of these global movements, including the commodity, which is the crude oil price movement, does not seem to have got factored into the bond yields yet..
If the mother of all economies is going to follow higher for longer, our sense is that despite the fact that headline inflation in India is cooling off, one has to keep in mind the other party poopers, as I call it, which is the fuel prices or monsoon potentially stoking up pulse and rice prices, etc..
The term deposit rates or for that matter the market rates in fixed income are already at elevated levels and it is very unlikely that you are going to see these yields ease in a very big hurry..
As I mentioned, if foreign investors start upfronting or front loading their allocations to India, which probably may not happen before January of 2024 because we hardly have three more months to go before the calendar year gets over, a small bit of trickle flows can come in but investors can make use of this opportunity to take investment positions in around a three- to five-year kind of duration bucket where the yields look fairly lucrative...
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