LIC Mutual Fund trims long-term bond holdings as rate-cut rally ends
LIC Mutual Fund is lowering maturities across debt schemes and investing in up to five-year notes, as India's rate cut-led bond market rally is largely over, chief investment officer at the asset manager said on Thursday.
ADVERTISEMENT Earlier this month, India's central bank slashed its key policy rate by a larger-than-expected 50 basis points, but also changed its policy stance to "neutral", leading to expectation that the rate-cutting cycle is coming to a close.
"We are trimming duration across schemes. The big part of the rally is over and with the current geopolitical scenario we have to be a bit cautious," Marzban Irani, whose fund house manages debt worth 220 billion rupees ($2.6 billion), said in an interview.
Irani, however, does not rule out one more India rate cut as the Federal Reserve should also ease rates later in the year. The fund manager is not very bullish on India's 10-year government bond, which he says should trade in a range of 6.15% to 6.30% over the medium-term against 6.26% on Thursday. The 10-year yield fell nearly 50 basis points after India's first rate cut in February through June 6, when the central bank surprised with the change in stance. Since then, it has risen 4 basis points.
ADVERTISEMENT
Prateek Shroff, a fund manager at LIC Mutual Fund, said that bank-issued one-year certificates of deposit are trading at 6.40%-6.50%, "a very good accrual" over the policy repo rate of 5.50%.
"When the market is in passive mode, the shorter-end will continue to remain in demand," Shroff said.
ADVERTISEMENT Shroff also expects one more rate cut this year, probably in October or December. Short-term bond yields should remain contained despite the central bank's announcement of an operation to withdraw cash from the banking system, the fund managers said.
ADVERTISEMENT "Yields can harden 5-10 bps on the shorter end because of this but then the market will settle down," Shroff said.
LIC Mutual Fund is also comfortable with corporate bonds of two-to-three years due to their attractive returns over overnight funding rates, according to Shroff. ($1 = 85.8070 Indian rupees)
(You can now subscribe to our ETMarkets WhatsApp channel)
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Time of India
39 minutes ago
- Time of India
'Pact driving up almond and machinery exports from South Australia'
Live Events (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel South Australia's exports of almonds, horticultural products, machinery and citrus fruits to India have increased since the India-Australia Economic Cooperation and Trade Agreement (ECTA) came into force on December 29, 2022, said Frances Adamson AC, Governor of South Australia produces 70% of the country's premium wine, and Canberra is keen on more excise duty cuts as India is seen as an important market for the beverage."A key benefit for South Australia has been access to more Indian goods, providing more choice for South Australian businesses and consumers," Adamson and Australia are currently negotiating a Comprehensive Economic Cooperation Agreement (CECA). This is expected to further boost bilateral goods trade which was around $25 billion in FY25."India is certainly seen as an important market, perhaps more important in future than it is now, but that will depend on the outcome of the negotiations," she said on higher wine exports to ECTA, exports of Indian rice to South Australia have surged 200% and those of vehicles are up 135%."In fact, India's exports to Australia as a whole have increased 9% since the ECTA entered into force (which) is a faster rate than India's exports globally," she Australia's exports of horticultural products to India rose 15%, machinery parts increased 11%, and wine grew 23% to AUD 8.6 million after the trade pact. Australia was India's largest market for wine imports with a 33% share of the imported wine market. "Now we would love to grow that, but to grow substantially, I think would probably require reductions in excise duties," she of almonds from South Australia in the 12 months to April 2025 were AUD 21.5 million, an increase of 124%, while that of citrus fruits grew 22% to AUD 2.4 million.
Time of India
39 minutes ago
- Time of India
Domestic natural gas price to hit govt ceiling in July
Domestic natural gas price is set to rise to the government-set ceiling of $6.75 per mmbtu next month, from $6.41 currently, as the rate is linked to crude prices, which surged this month due to the Iran conflict. The Centre revises the Administered Price Mechanism (APM) rate every month based on the average crude price of the preceding month. The price is set at 10% of the price of the Indian crude basket, subject to a ceiling of $6.75 per mmbtu. At June's average crude price of $70 per barrel, the effective rate for July will be $6.75 per mmbtu. Crude prices have started softening after a ceasefire between Iran and Israel earlier this week, and are currently hovering around $68 per barrel. If the average slips below $67.50 in July, the APM rate for August could fall below the ceiling. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like The Top 25 Most Beautiful Women In The World Articles Vally Undo Since the government introduced the new pricing formula in April 2023, linking domestic gas to crude oil, prices have mostly remained at the ceiling - first $6.50, and later $6.75 per mmbtu - except in June, when lower crude prices brought the rate slightly down. Prior to April 2023, there was no ceiling price for natural gas, allowing consumers to benefit from lower prices. Under the new regime, prices have generally been higher, squeezing margins for gas distributors and industrial users, while rewarding gas producers. Live Events
Time of India
an hour ago
- Time of India
Eli Lilly to roll out diabetes medicine in prefilled pen
Eli Lilly will soon launch Mounjaro KwikPen in India. This follows regulatory approval for the diabetes and obesity drug. The KwikPen offers a convenient, once-weekly administration. It contains four fixed doses. This launch intensifies competition with Novo Nordisk's Wegovy. Mounjaro's dual mechanism may offer superior efficacy. The availability of all six dosage options will support personalized treatment. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads US pharmaceutical major Eli Lilly on Thursday announced its plan to launch blockbuster diabetes drug tirzepatide ) in KwikPen , a prefilled pen designed for once-a-week administration for single patients in the Indian market, two days after its rival Danish drug maker Novo Nordisk launched the weight loss drug Wegovy as a weekly injection in the country, intensifying competition in the booming obesity Lilly said it received the approval of the Indian drug regulatory authority but did not comment on the launch timeline. The expected price of the pen device was also not disclosed. Once launched, the company said each pen will deliver four fixed doses of 0.6 ml and has been approved in six dose strengths including 2.5 mg, 5 mg, 7.5 mg, 10 mg, 12.5 mg, and 15 launched earlier this week, is expected to be in the pharmacies by the end of this month. The delivery device will contain four doses of 0.25 mg, 0.5 mg and 1 mg priced at '17,345 a month. This translates into a weekly cost of '4,366. The 1.7 mg dose will be priced at '24,280 per month, and 2.4 mg dose will be priced at '26, Misra, chairman of Fortis C-DOC, Centre of Excellence for diabetes, metabolic diseases and endocrinology said Mounjaro's dual mechanism may offer superior efficacy, however "wider adoption" will depend on the "price" of the Tucker, president and general manager of Eli Lilly India, said the approval of Mounjaro KwikPen marks a step forward in the care of people living with type 2 diabetes and obesity, offering a convenient way for patients to take their medication. Mounjaro reduces body weight and decreases fat mass by regulating appetite."With this approval, all six dosage options for Mounjaro will soon be available in India, supporting a more personalised approach to treatment and allowing healthcare professionals to tailor care based on individual patient needs and clinical goals," he is the first and only dual GIP (glucose- dependent insulinotropic polypeptide) and GLP-1 (glucagon-like peptide-1) receptor agonist, indicated as an adjunct to diet and exercise for the treatment of Type 2 diabetes and chronic weight management in adults with obesity or overweight, with one weight-related comorbidity.
