We are experiencing rise in bond yields. Here is what experts have to say about investments in debt funds...

1. DOMESTIC DEBT MARKET OVERVIEW AND
WHAT TO EXPECT IN NOVEMBER 2021
Prashant Pimple of JM financial AMC, Sandeep Agarwal of Sundaram MF and Shriram Ramanathan of L&T MF share
with us their outlook on the debt market.
AMFI Registered Mutual Fund Distributor

2. FIXED INCOME RATES SNAPSHOT - OCTOBER 2021
Source : Edelweiss Mutual Fund
Source: CCIL,Refinitiv * As on Oct 22, 2021; ** As on Oct 15, 2021; @ As on Sep 24, 2021; @@ As on Apr 23, 2021; @@@ As on Oct 23, 2020
• Bond yields rose following the weekly debt auction which led to fresh supply of sovereign debt in the domestic debt market. Market participants also
remained on the side lines as they awaited the outcome of the U.S. Federal Reserve monetary policy review which was due on Nov3, 2021. However,
falling global crude oil prices and decline in yields on U.S. Treasuries restricted further losses.
• Yield on the 10-year benchmark paper (6.10% GS2031) rose 3 bps to close at 6.39% as compared to the previous week’s close of 6.36%.
• Data from RBI showed that India’s India’s foreign exchange reserves fell for the first time in three weeks to $640.10 billion as on Oct 22, 2021 from
$641.01 billion in the previous week.
• Data from RBI showed that reserve money grew 14.0% on a yearly basis for the week ended Oct 22, 2021 compared to an increase of 12.2% in the
same period of the previous year.

3. WHAT TO EXPECT IN NOVEMBER 2021 – VIEWS FROM FUND MANAGERS
PRASHANT PIMPLE - CIO DEBT, JM FINANCIAL AMC
Source : www.cafemutual.com
¡ RBI to prioritise growth and ensure adequate liquidity in the system to support the economic recovery
¡ Lower inflation means RBI sticking to the accommodative stance for some more time
¡ 10-year G-sec yield to rise gradually. Shorter end of the curve may come under pressure if rate hikes start
What to recommend
¡ For investment horizons of 36 months or more, dynamic bond funds is a good option.

4. WHAT TO EXPECT IN NOVEMBER 2021 – VIEWS FROM FUND MANAGERS
SANDEEP AGARWAL, SR. FUND MANAGER - FIXED INCOME, SUNDARAM MUTUAL FUND
Source : www.cafemutual.com
¡ Expect yields to gradually move upwards with short end of the curve outpacing the long end
¡ Inflation is back in RBI's comfort zone providing the central bank enough time for gradual policy normalisation
¡ RBI likely to take further steps to bring down market liquidity
¡ 10-year G-sec expected to trade in the range of 6.25%-6.50%
What to recommend
¡ Ultra-low duration funds best suited for an investment horizon of 1 to 3 months
¡ For 3 to 6 months horizon, low duration funds are most suited
¡ Short term, banking & PSU and Corporate bond funds are suitable for an investment horizon of 1 to 3 years

5. WHAT TO EXPECT IN NOVEMBER 2021 – VIEWS FROM FUND MANAGERS
SHRIRAM RAMANATHAN, HEAD OF FIXED INCOME – L&T MUTUAL FUND
Source : www.cafemutual.com
¡ RBI is likely to move further towards policy normalisation. The next steps could be further absorption of excess liquidity, change in
stance to 'neutral' and finally a rate hike
¡ Shorter end of the curve (0 to 5 years) is likely to remain under some pressure
¡ Long term yields (5+ years) face pressure due to the halt in GSAP programme but the likely inclusion of Indian government bonds in
global indices will lend support
¡ 10-year G-sec yield may move into the 6.5-7% range over the next few quarters
What to recommend
¡ Short term bond funds and banking & PSU funds are best suited for investors looking to ride the upward rate cycle over the next 2-3
years
¡ For long term investment, distributors can recommend corporate bond funds

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