Dhawal Dalal of Edelweiss MF, Marzban Irani of LIC MF and Pankaj Pathak of Quantum MF share their outlook on the debt market.

1. DOMESTIC DEBT MARKET OVERVIEW AND
WHAT TO EXPECT IN MAY 2021
Dhawal Dalal of Edelweiss MF, Marzban Irani of LIC MF and Pankaj Pathak of Quantum MF share their outlook on the
debt market.
AMFI Registered Mutual Fund Distributor

2. FIXED INCOME RATES SNAPSHOT - APRIL 2021
YIELDS FELL ACROSS ALL THE ASSET CLASSES
Source : SBI Mutual Fund

3. WHAT TO EXPECT IN MAY 2021 – VIEWS FROM FUND MANAGERS
Source : www.cafemutual.com
Dhawal Dalal | CIO – Fixed Income, Edelweiss MF
¡ 10 year G-sec yield to trade between 6 and 6.10% in the near term with RBI firmly in control of bond market
¡ Supply of G-sec and state - development loans to pick up in May 2021 and may push yields a bit higher from
their current levels
¡ Yields of money market assets (up to 1 year) to gradually trend higher
¡ The second wave of Covid – 19 is expected to be neutral to positive for the bond market
¡ Any sustained shortfall in tax revenue may have a cascading effect on government expenditure or other avenues.
Expect the fiscal deficit to remain below 6.8% in FY 22.
What to recommend
¡ Recommend long duration funds. Preference for AAA-rated bonds maturing in 5-10 years segment due to attractive carry and
steepness in yield curve.

4. WHAT TO EXPECT IN MAY 2021 – VIEWS FROM FUND MANAGERS
Source : www.cafemutual.com
Marzban Irani | CIO – Fixed Income, LIC MF
¡ Outlook on the debt market is cautiously optimistic.
¡ Yields are expected to remain lower as RBI will keep rates on hold to support economic activity and gradually
suck out the liquidity via voluntary retention route in a non disruptive way
¡ 10-Year yield is expected to be in the range of 6%-6.50%
¡ Due to inflation pressure, huge borrowing and global yields rising upward, 10-year yield might also rise up
to 6.50% levels gradually
What to recommend
¡ Low duration funds, short duration funds and Banking & PSU fund, depending upon the risk appetite of the investors

5. WHAT TO EXPECT IN MAY 2021 – VIEWS FROM FUND MANAGERS
Source : www.cafemutual.com
Pankaj Pathak | Fund Manager – Fixed Income, Quantum MF
¡ Recent rise in Covid-19 infections resulting in lockdowns in various states will push possibility of monetary
policy normalization
¡ Given increased uncertainty on growth outlook, the RBI may become more tolerant to inflation
¡ Liquidity condition may remain in large surplus for an extended period and there might not be any reversal
in policy rates in the current year unless outlook on inflation and growth changes drastically. This will ease
pressure from the debt markets
¡ Domestic demand supply dynamics and the RBI interventions may keep the bond markets in tight range in near term
¡ Money market and short term bond yields may remain suppressed due to potential delay in normalization of liquidity condition
What to recommend
¡ Liquid funds and dynamic bond funds to ride through the interest rate volatility

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