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Government sticking close to fiscal numbers will likely improve market sentiment
01-Feb-2018 (10:37)
The synchronous global growth, continuous reforms from government and earnings rebound in second half of fiscal augur well for markets
02-Jan-2018 (11:07)
We expect 10-year benchmark yields to remain in range of 7.10% to 7.40%
27-Dec-2017 (15:47)
We believe from hereon; stock performances would be a function of earnings growth
26-Dec-2017 (12:23)
We believe that over the long term there is a definite room to grow amongst global stagnancy
01-Oct-2017 (21:06)
Fixed income continues to be driven by both local and global events, though local factors have far more weightage
30-Sep-2017 (20:30)

Mr. Avnish Jain
In an interview with Anjali Raulgaonkar from Capital Market Publishers, Avnish Jain, Fixed Income at Canara Robeco Mutual Fundsaid,The current environment is conducive for longer term trend in interest rates. Investors should stick to asset allocation strategies and continue to invest in debt fund according to their respective risk profiles.


Excerpts:

1. What are your views on fixed income market? How have the yields moved and which direction you see them moving in near to mid-term and why? What will the key driving factors for yields?

Fixed income continues to be driven by both local and global events, though local factors have far more weightage. Sharp fall in inflation since July 2016 brought CPI below RBI's target of 4%. CPI touched a low of 1.5% in June and this prompted RBI to reduce rates in August policy. Post that inflation has shown an uptick, primarily driven by few items in the food basket. Core inflation has also shown an uptick as GST got implemented and government finalized the recommendations of 7th Pay commission on allowances. In the near-term yields have inched up as near term expectations of rate cut have faded. In the medium term we are likely to see yield go down as slowing growth rate debate has taken center stage. With inflation largely under control, RBI may look to support growth in absence of any material fiscal support.

2. After the RBI policy rate cut, where do you see the bond yield moving (long-term bond yields and short-term bond yields both)

Both short term and long term yields have moved up post RBI rate cut as further near term cuts are not expected by the market. However, as inflationary pressures of food prices is expected to subside post monsoon, inflation is likely to start moderating again. With growth concerns rising, it is expected RBI may ease policy rates further. Short term and long term bond yields should go down in the medium term.

3. July CPI and WPI have inched up. Is it the beginning of rise in inflation? Why?

July CPI has gone up but remains below RBI's medium-term target of 4%. As food price pressures typically subside post monsoons, inflation should moderate on lower food prices. Further a sharp drop in growth coupled with GST implementation is likely to keep a lid on core inflation.

4. What measures RBI will take to mop-up excess liquidity? What will be its impact on yields?

RBI is likely to continue to use OMOs, MSS and daily LAF operations to continue to mop up excess liquidity. With ample liquidity, there is likely to be no meaningful impact on yields.

5. What is the ideal time frame which an investor should look at while investing in a short-term fund?

An ideal time frame for a short-term fund is 1-3 years

6. What is your strategy for short term funds? What is your exposure to long term funds and why?

Short term fund is a combination of high quality accrual and some duration management. The fund predominantly invests in corporate bonds. Long term funds typical invest in government bonds and AAA corporate papers to maintain liquidity, as the duration is actively managed. The asset allocation between government bonds and corporate bonds depends on the available spread.

7. How often do you re-balance your debt allocation?

All funds are actively managed in line with overall interest rate view.

8. What is your advice to the investors?

The current environment is conducive for longer term trend in interest rates. Investors should stick to asset allocation strategies and continue to invest in debt fund according to their respective risk profiles. Depending on the fund, the investment horizon should be anywhere from 1-5 years.

With low probability of rate cuts, developments over fiscal deficit will drive the market in near term
06-Nov-2017 (11:38)
We suggest that investors looking to make a lump sum investment to stagger their investments
28-Oct-2017 (15:49)
We believe that there will be a long pause in RBI's rate action and this will lead to bond yields remaining in a very tight range in the near term
01-Sep-2017 (11:05)
We believe that Indian equity is a very promising asset class to invest in, over the medium term, despite the recent smart run up in the market
01-Aug-2017 (14:52)
One has to be selective in identifying the companies /sectors with high growth potential
05-Jul-2017 (18:30)
Match the investment horizon and risk appetite to the scheme selection
08-May-2017 (14:53)
In India ETFs are still at a nascent stage and the retail participation is very low
27-Mar-2017 (14:06)
Earnings recovery would be important for the markets going ahead
02-Mar-2017 (14:47)
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