5 days ago
Fund Managers See Opportunity in Indian Bonds Despite Rate Risks
Some investment managers think Indian bonds look attractive because their yields are relatively high.
A bond is like lending money and receiving interest in return.
The 10-year government bond yield increased from 6.15% in June 2025 to about 7.18%.
Devang Shah said investors may not earn much from price gains in the next six months, but today’s yields could be a good starting point.
He suggested adding longer-term bonds slowly after the first one or two interest-rate increases.
Sunaina Da Cunha was more cautious because oil prices above $100 could keep inflation high.
She preferred investments that mature quickly until markets become less volatile.
Both managers said investors should choose bond durations based on when they need their money rather than trying to perfectly predict the market.
Fund managers said current Indian bond yields offer attractive entry points after years of underperformance.
The 10-year government bond yield rose from 6.15% in June 2025 to about 7.18%.
Devang Shah favored gradually adding duration after the first one or two rate hikes, unless tightening becomes severe.
Sunaina Da Cunha preferred liquid, money-market and very short-duration funds while uncertainty and high crude prices persist.
Panelists cited strong corporate balance sheets but said India’s corporate bond market remains shallow and difficult to time.
- Who
- Devang Shah of Axis Mutual Fund, Sunaina Da Cunha of Aditya Birla Sun Life AMC, and Banthia discussed the outlook.
- What
- Fund managers assessed opportunities and risks in Indian bonds at current yields.
- Where
- India’s bond market.
- When
- The comments were made as investors evaluated changing bond-market conditions; the 10-year yield data cited spans June 2025 to the period of the discussion.
- Why
- Investors are reassessing bonds because of inflation, crude oil prices, liquidity, RBI policy and changing interest-rate expectations.
Selective Duration Exposure
Cautious Short-Duration Approach
Timing bond purchases
Selective Duration Exposure
Devang Shah said current yields offer attractive entry points and investors could gradually add duration after the first couple of rate hikes, unless the cycle becomes very deep.
Cautious Short-Duration Approach
Sunaina Da Cunha advised staying in liquid, money-market and very short-duration funds until volatility settles.
Interest-rate outlook
Selective Duration Exposure
Shah’s view assumes the market may become more favorable for longer-duration bonds after initial rate hikes.
Cautious Short-Duration Approach
Da Cunha warned that crude oil above $100 a barrel could make the hiking cycle longer than the one or two increases expected in August.
Investment strategy
Selective Duration Exposure
Banthia said bonds had become attractive after years of underperformance amid a global rotation from risk assets to bonds.
Cautious Short-Duration Approach
The panel cautioned that investors should not try to time the bond market and should instead focus on appropriate asset allocation and matching duration to their financial needs.
Key facts
- 10-year government bond yield
- Rose from 6.15% in June 2025 to around 7.18%.
- Near-term return outlook
- Devang Shah said investors may not see capital gains over the next six months.
- Preferred funds amid uncertainty
- Sunaina Da Cunha favored liquid, money-market and very short-duration funds.
- Potential later opportunity
- Da Cunha said two- to three-year corporate bonds could become attractive once volatility settles.
- Crude oil price
- Prices were reported to be above $100 a barrel.
- Corporate balance sheets
- Panelists described them as strong after companies raised equity, deleveraged and addressed asset-liability mismatches.
- Market limitation
- India’s corporate bond market was described as shallow, with limited retail participation and inefficient taxation.
Quotes
Banthia
Fund manager commenting on global asset allocation and the relative attractiveness of bonds
“I’m seeing a big rotation globally from risk assets to bonds”
businesstoday.in
Sources
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