As equities wobble, bonds shine brighter: why is fixed income regaining favor with risk-averse investors
RBI's easing cycle: A tailwind for fixed income
Live Events
A safe haven amid uncertainty
Investor Takeaway: Balance is back
(You can now subscribe to our
(You can now subscribe to our ETMarkets WhatsApp channel
As global and domestic equity markets turn choppy amid geopolitical tensions, rate uncertainties, and trade disruptions, a growing number of investors are turning their gaze towards stability—and fixed income is quickly emerging as the answer.'For many investors, especially those with a lower risk appetite, the recent equity market swings have been unsettling,' said Kush Gupta, Director at SKG Investment & Advisory. 'This is a good time to look at bonds and fixed income instruments as a way to bring balance and stability to your portfolio.'According to Gupta, fixed income instruments such as corporate bonds, debt mutual funds, and debentures are becoming especially attractive in the current macroeconomic setup. 'We always tailor debt allocations based on the client's age, income, and risk profile. But today, even for aggressive investors, the market is signaling a need to rethink asset allocation,' he told ETMarkets.Gupta added that with expectations of further rate cuts and continued geopolitical risks, locking into fixed return opportunities for 24–36 months makes strategic sense. 'India's strong fiscal discipline and RBI's effective currency management are making Indian bonds more appealing—both to domestic and foreign investors.'Backing this trend, Avnish Jain, Head – Fixed Income at Canara Robeco Mutual Fund, pointed out that the RBI's recent 25 bps rate cut and shift to an 'accommodative' stance mark the beginning of a meaningful monetary easing cycle.'With inflation softening and growth moderating, the policy environment is becoming favorable for debt instruments,' Jain said. 'In the short term, ultra-short and short-duration funds offer attractive opportunities as shorter yields are expected to decline faster. For long-term investors, gilt funds, dynamic bond funds, and income funds are well-positioned to benefit from the falling interest rate trend.'Jain emphasized that with a projected 75–100 bps of rate cuts in the coming quarters, duration strategies are especially well-suited for those seeking capital appreciation with manageable risk.Adding another layer of perspective, Sujan Hajra, Chief Economist and Executive Director at Anand Rathi Group, said that while fixed income may not always offer the highest returns, its role in reducing overall portfolio volatility cannot be overstated.'For conservative investors or those nearing retirement, fixed income provides much-needed predictability and peace of mind,' Hajra said. 'Running yields in the bond market could hover between 7% and 9% over the next year, which is quite attractive considering the current environment.'That said, Hajra added a note of caution: 'While fixed income brings stability, investors focused on long-term wealth creation should still have exposure to equities, which offer higher returns over time—even after adjusting for risk.'Whether you're a retiree looking for regular income, a first-time investor seeking safety, or a market-weary equity investor in search of stability, now may be the time to give fixed income another look.As Kush Gupta sums it up: 'When markets are volatile and uncertainty is high, fixed income offers a much-needed anchor for your portfolio. It's not just about safety—it's about making smart, strategic choices in changing times.': Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Time of India
32 minutes ago
- Time of India
Trade deal lacks fine print, raising doubts over US-China truce: Shaun Rein
Live Events (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel "You can have companies, the big automakers like Ford and GM are rumoured to say, we need to relocate our manufacturing to China, so we can get access to rare earths despite the heavy tariffs that they would then incur by going into the United States. But here is the thing, China's media has been a lot more circumspect with the details of this so-called trade agreement," says Shaun Rein, China Market Research is a great and big question. Trump is saying the deal has been signed and he has been talking about that the Chinese are going to send rare earths and magnets in advance to whatever the United States needs because what you have seen in the last month is the lack of rare earths that were exported to the United States has really crippled the American economy You can have companies, the big automakers like Ford and GM are rumoured to say, we need to relocate our manufacturing to China, so we can get access to rare earths despite the heavy tariffs that they would then incur by going into the United States. But here is the thing, China's media has been a lot more circumspect with the details of this so-called trade has said the rumour is that they will give maybe export licenses to rare earths on a six-month trial basis to American companies. So, basically Trump is exaggerating the win in his mind and China is being a lot more honest probably saying well we do not have all the details ironed out, we want to come to an agreement but quite frankly China has the upper hand in the trade war with the United States right that the United States makes except for semiconductors, the Chinese can buy elsewhere. So, instead of buying American beef, they are buying Australian beef; instead of buying American oil, they are buying Canadian oil; instead of buying American soybeans, they are buying Brazilian soybeans. So, what you have seen is that there is a total shift in trade patterns and a total shift in power and China is at the top of the triangle, the top of the pyramid right now in terms of buying goods and trading goods from other countries. We are seeing a shift in world order right I mean that that is not true. I mean, Chinese equity markets are up 15-16% since the start of the year while the S&P 500 is only up about 2%. So, it is quite clear that the Chinese Hong Kong equity markets are outperforming the United States right the equity markets also do not necessarily reflect the economy. So, what you are seeing right now is Abigail Johnson, who is the head of Fidelity , the rumour is today that her private investment house is going to be selling 40 Chinese tech companies that they have long held because they are worried about the regulatory and I have been talking with a lot of mutual funds, I have been talking with a lot of LPs like pension funds and endowments and they are getting huge pressure from not just Trump , but previously under the Biden regime to derisk by not investing in Chinese equities, so that does not mean the economy is bad, that just means more oppression and bullying from the United States because they are trying to really contain China's economic might have happened eight years ago and that might have worked eight years ago. But the big problem is the United States has gone after Europe. The United States has gone after Canada. You even hear Howard Lutnick, the Secretary of Commerce , criticised India last week and said, why is India buying Russian weapons, they should be buying American the reality is the United States under Trump and Biden has been bullying people all around the world. And I think at some point the global south or I prefer to call it the global majority is saying you know what, let us not deal with all the drama, let us not deal with weaponization of the US dollar, weaponization of technology and let us move closer towards China where we have a lot more stable relations with Australia for instance, Australian dollar has strengthened in the last couple weeks because basically Australia is a proxy for China. Australia's economy does well when China's economy does well, whether it be buying iron ore, whether it be buying tourists going to Australia to buy products, so that is why the Aussie has strengthened and the US dollar is weakened. Now when it comes to liquidity and volume going back towards China, we are still at a very initial of the global funds only have about 25% of their holdings exposed to China. I recommend retail investors to have 15% to 20% because of the volatility and the regulatory we are seeing in my conversations with institutional investors like hedge funds that they want to come back into China, but they have not come back yet. Now, that gives a great opportunity for speculators and people who have a high-risk appetite to trade in front of the institutional personally, I am getting more exposure to Hong Kong equities the last six months because I am trying to front run what the hedge funds are doing because they still have not quite gotten into the markets yet and they will in the next three to six months because they have to make the business case, China is outperforming the S&P the United States needs a deal. Frankly, China controls about 30-35% of global manufacturing. So, America might have the money, they might have the capital, but they need to buy the products from China. At the end of the day, China makes not just rare earths, about 90% of refined rare earths, but they also make most of the ibuprofen, most of the of the antibiotics in the world comes from China. So, at the end of the day, that is real leverage. So, for instance in 2017, 18% of Chinese exports went to the US, that number is down to 14%. China on the other hand has shifted and exports to Asean, has gone up to 16%.So, basically, it is a game of chicken right now. China's economy is hurting, do not get me wrong. There are about 15 million people who are involved in the export sector. You have seen that the CPI index has dropped about 0.1%. So, we are dealing with the D-word, the economy in China is not booming, but China is not going to blink. They have the resolve to push hard back against Trump and Scott Bessent and Howard Lutnick because at the end of the day, the Americans need to buy from China. They cannot buy antibiotics from any other country in the world except for a little bit from India.
Time of India
35 minutes ago
- Time of India
Is there a market rotation in favour of IT, pharma and auto? Dhananjay Sinha answers
Live Events (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel CEO & Co-Head– Institutional Equities,, says the IT sector is showing signs of recovery as US-China relations improve, easing investor concerns about order book uncertainty. Potential US tax cuts could further boost the sector. Significant corrections in IT stocks have created attractive valuations, leading to a possible rotation of investments into IT. Pharma and auto sectors may also benefit from this you look at the market profile, there has been a good rebound, I would say, after the initial correction. If you look at the market capitalisation of NSE, it had actually shrunk by almost like Rs 90 lakh crore to the lows in February or end of February and from there on, the market cap erosion has actually narrowed quite substantially because of the recovery that has happened. We have recovered almost like Rs 70 lakh crore out of the balance is only Rs 20 lakh crore from the peak level that we saw in September last year. So, I would say what has happened is that sectors have taken turns to rebound. We had RBI also infusing liquidity substantially, so that has also played out. What is happening now is the IT sector which is actually gradually coming back and the fact that there was an overhang on the sector with the recession risk being priced into the US economy and it was a spillover effect of the US-China conflict, the engagement that is happening between US and China in thawing the lock jam is something that can be seen as positive for the IT sector because a lot of investors were concerned about the order book uncertainty that it had created.I would say the overhang is actually receding. There is also a possibility that the market might start pricing in tax cuts in the US as well. These are the two things that are moving in favour of the IT sector. IT stocks have seen significant correction and there is a certain amount of valuation that people might be looking at. All put together, there does seem to be this whole rotation across sectors moving in favour of IT now. So, IT is one sector. There are other sectors like pharma where there is a possibility of rotation in favour of them. Auto is another one, news will have an effect on the alco-beverage companies. What the Maharashtra government has announced may create a certain amount of suspicion that other states might actually also announce. This could be because state governments are also struggling on the revenue side. There is a likelihood that people might expect or extrapolate this kind of a scenario in other states as well.I would say people will need to wait to see whether they get more clarity on this and whether this can create a trend. While we are positive fundamentally on space, we do have Allied Blenders in our list, but this is a regulatory risk that will need to settle down before we take a decisive view.
Economic Times
35 minutes ago
- Economic Times
Is there a market rotation in favour of IT, pharma and auto? Dhananjay Sinha answers
Tired of too many ads? Remove Ads CEO & Co-Head– Institutional Equities,, says the IT sector is showing signs of recovery as US-China relations improve, easing investor concerns about order book uncertainty. Potential US tax cuts could further boost the sector. Significant corrections in IT stocks have created attractive valuations, leading to a possible rotation of investments into IT. Pharma and auto sectors may also benefit from this you look at the market profile, there has been a good rebound, I would say, after the initial correction. If you look at the market capitalisation of NSE, it had actually shrunk by almost like Rs 90 lakh crore to the lows in February or end of February and from there on, the market cap erosion has actually narrowed quite substantially because of the recovery that has happened. We have recovered almost like Rs 70 lakh crore out of the balance is only Rs 20 lakh crore from the peak level that we saw in September last year. So, I would say what has happened is that sectors have taken turns to rebound. We had RBI also infusing liquidity substantially, so that has also played out. What is happening now is the IT sector which is actually gradually coming back and the fact that there was an overhang on the sector with the recession risk being priced into the US economy and it was a spillover effect of the US-China conflict, the engagement that is happening between US and China in thawing the lock jam is something that can be seen as positive for the IT sector because a lot of investors were concerned about the order book uncertainty that it had created.I would say the overhang is actually receding. There is also a possibility that the market might start pricing in tax cuts in the US as well. These are the two things that are moving in favour of the IT sector. IT stocks have seen significant correction and there is a certain amount of valuation that people might be looking at. All put together, there does seem to be this whole rotation across sectors moving in favour of IT now. So, IT is one sector. There are other sectors like pharma where there is a possibility of rotation in favour of them. Auto is another one, news will have an effect on the alco-beverage companies. What the Maharashtra government has announced may create a certain amount of suspicion that other states might actually also announce. This could be because state governments are also struggling on the revenue side. There is a likelihood that people might expect or extrapolate this kind of a scenario in other states as well.I would say people will need to wait to see whether they get more clarity on this and whether this can create a trend. While we are positive fundamentally on space, we do have Allied Blenders in our list, but this is a regulatory risk that will need to settle down before we take a decisive view.
