GST rejig: Group of Ministers accepts Centre's rate rationalisation proposal to scrap 12% and 28% slabs
(With inputs from Agencies)
(This is a breaking story, more updates coming…)
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Bond investors are navigating heightened market volatility due to the rapidly evolving geopolitical situation. Issues such as the Russia-Ukraine war, US tariff action on Indian exports, and ongoing GST rate rationalisation are influencing bonds and equities alike. In the given environment, it is prudent to efficiently plan both short-term and long-term investments. The country's 10-year government bond yield hovers in the range of 6.52-6.54%. This comes amid broader conversations on economic reforms, tax changes, and a shift in monetary policy priorities — all intended to support sustainable growth and financial stability. One of the key dynamics investors must watch is the relationship between interest rates and bond prices — a core element of bond market risk. As a rule, bond prices decline when interest rates rise. It is generally observed when central banks signal further tightening to manage the ever-evolving economic conditions. That is why efficient risk management is crucial. Adding to the same, Navy Vijay Ramavat, MD, Indira Group, cautions, 'Bond risks are driven mainly from interest rate movements & economic cycles. For government or corporate bonds, conservative investors can rely on coupons for stable income. While active traders must track yields, inflation, and monetary policy closely to manage risks and safeguard returns.' Managing bond risks requires devoted tracking of RBI policies, global and domestic economic conditions, inflation trends, and credit ratings. Proper diversification across maturities and issuers further defends portfolios from volatility and unexpected market swings. Track Reserve Bank announcements and market updates to anticipate policy-driven changes that may impact bond yields and prices. Evaluate bond yield trends with current and forecasted inflation. Aim to safeguard real returns. Verify creditworthiness and bond safety by checking ratings from CRISIL, ICRA, or CARE, especially before investing in corporate bonds. Diversify holdings by investing across a range of maturities. Focus on different issuers to reduce concentration risk. Prioritise more liquid bonds to ensure you can quickly exit positions if market conditions deteriorate. This will help you in protecting your portfolio. Government bonds are backed by a sovereign assurance, i.e., a guarantee. This minimises default risk. Still, these bonds can face real-return pressure when inflation outpaces yields. On the other hand, corporate bonds carry credit risk, making proper background checks, bond assessment extremely vital. In case inflation continues to trend higher in the range of 4 to 5% such a development threatens to erode the purchasing power for all fixed-income products. Government bonds provide higher liquidity. This permits investors to exit large positions with minimal slippage. Corporate bonds, on the other hand, can be less liquid, especially in turbulent conditions or market downturns. The market is now focused on continuing to adopt centralised clearing and advanced risk management to minimise losses and bring more stability and accountability to the system. Transparent data, readiness for market volatility are now crucial elements that are mandatory for all bond market participants. Disclaimer: This article is for informational purposes only and is not financial advice. Bond investments carry risks, and investors should consult a financial advisor before making decisions.
