Fixed Income Update

Quick Take:

  • Reserve Bank of India cut the benchmark repo rate by 25 basis points to 6% in its August meeting.
  • From a structural perspective it appears that we are very close to the end of the rate cycle.
  • In the near term we expect the markets to remain range-bound.
  • Investor should look to invest in short-term corporate bond funds, which are relatively insulated from duration risks but take advantage of the steep short term yield curve.

The Monetary Policy Committee of the Reserve Bank of India cut the benchmark repo rate by 25 basis points to 6% in its August meeting. This reduction was in line with market expectations as reflected by the subsequent muted reaction by the bond market. The 10 year government bond closed the month at 6.53%, ~6 bps lower than its previous month end close.

Headline consumer price index (CPI) for the month of July was reported at 2.36% marginally up from previous month’s reading of 1.54%. This was on account of cost of housing, energy and clothing which rose further coupled with food prices which fell at a softer pace.

 

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Portfolio data as on 31st August, 2017. Source of data: Bloomberg, ACEMF

Disclaimer: Past performance may or may not be sustained in the future. Sector(s) / Stock(s) / Issuer(s) mentioned above are for the purpose of disclosure of the portfolio of the Scheme(s) and should not be construed as recommendation. The fund manager(s) may or may not choose to hold the stock mentioned, from time to time. Investors are requested to consult their financial, tax and other advisors before taking any investment decision(s).


Statutory Details: Axis Mutual Fund has been established as a Trust under the Indian Trusts Act, 1882, sponsored by Axis Bank Ltd. (liability restricted to Rs. 1 Lakh). Trustee: Axis Mutual Fund Trustee Ltd. Investment Manager: Axis Asset Management Co. Ltd. (the AMC) Risk Factors: Axis Bank Limited is not liable or responsible for any loss or shortfall resulting from the operation of the scheme. 

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