A $115 Billion Fund Manager Bets on Shortest Maturity India Debt
(Bloomberg) -- India's economic growth is set to accelerate sharply, making the ultra short-end of the debt market the most attractive segment, according to one of the country's top money managers.
The recent slowdown was a 'mid-cycle correction', and the central bank's policy support has laid the groundwork for growth to return to its long-term trend, Manish Banthia, chief investment officer of fixed-income at ICICI Prudential Asset Management Co., said in an interview.
The outlook is prompting Banthia, whose firm manages about $115 billion in assets, to focus on securities with maturities of up to two years or less. This positions him in contrast to many of his peers, who remain bullish on longer-duration debt, anticipating a more gradual economic recovery.
'This disconnect implies increased risk of a sudden spike in yields at the three-year and longer points as the economy strengthens,' he said.
The preference for shorter-dated paper, already a favored play in India's debt market, has been reinforced by the central bank's surprise move last Friday: a bigger-than-expected rate cut and additional liquidity injections. However, the authority also unexpectedly shifted its stance to neutral, warning that it has 'very limited space' left for further easing.
Adding to the pressure, Indian bonds sold off on Wednesday on concerns that the central bank could soon begin to withdraw excess liquidity, which has led to the overnight rate falling 20 basis points below the policy rate.
Despite this development, a central bank policy reversal might still be six months to a year away, said Banthia. The Reserve Bank of India is unlikely to take measures to bring the overnight rate on par with the policy rate over the next three months, he said.
'The RBI has front-loaded certain policy measures and will now allow them to play out,' Banthia said. 'If the recovery unfolds as they anticipate, they may revisit the liquidity situation in the next calendar year.'
India's economy expanded faster than expected in the January-March period, but rising trade uncertainties are weighing on sentiment. Despite this, the central bank maintained its 6.5% growth forecast for the fiscal year to March 2026, which falls short of the government's aspirations for 8% growth.
Excerpts from the interview:
More stories like this are available on bloomberg.com
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Time of India
15 minutes ago
- Time of India
Fuelling Growth: PSU banks told to boost credit to crucial sectors
The government is encouraging state-run banks to increase lending to productive sectors, particularly MSMEs, through targeted Mudra financing and identification of high-employment clusters. Loan melas are planned for retail customers, following the RBI's recent rate cut to boost private sector investment. The government is also finalizing the Grameen Credit Score to improve credit access for SHGs and the rural population. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads New Delhi: The government has nudged state-run banks to push credit in productive areas of the economy, including micro and small enterprises As part of various initiatives planned, banks will identify 50 high-employment clusters of MSMEs and push lending through sector-specific Mudra financing products. For retail customers, loan melas at bank branches are also being planned, said people familiar with the this month, the Reserve Bank of India (RBI) announced a 50 basis points rate cut, bringing the repo rate down to 5.50%. The repo rate is the interest rate at which the RBI loans money to commercial RBI has pegged the growth for 2025-26 at 6.5%, and with loans becoming cheaper after the rate cut, it is expected to fuel more private sector capital expenditure."We want banks to proactively support our MSMEs and self-help groups (SHGs) and align with the various other schemes announced in the budget," said an official requesting anonymity. Finance minister Nirmala Sitharaman is also expected to hold a performance review meeting of public sector banks (PSBs) later this month where the issue of pushing credit to important sectors of the economy without compromising on due diligence or underwriting standards will be discussed, said the above quoted this year, the government had approved the Mutual Credit Guarantee Scheme for MSMEs, guaranteeing loans up to ₹100 in the FY24 budget, the scheme is expected to facilitate the availability of credit for the purchase of plant, equipment and machinery by MSMEs and give a major boost to manufacturing."We are also finalising the modalities and contours of the Grameen Credit Score (GCS) in consultation with the stakeholders, and this will ensure more credit access to retail customers," the official said. Announced in the FY25 budget, GCS is tailored for the credit assessment purposes of SHG borrowers and the rural population, and will lead to access to formal credit for the rural population, including farmers and marginalised to a report by CareEdge Ratings, credit outstanding for scheduled commercial banks touched ₹182.5 lakh crore as of March 31, 2025, registering a growth of 11.1% y-o-y compared to 19.3% (including merger impact) in Q4 FY24. "As of March 2025, PSBs have gained market share in total credit, accounting for 53.8%, compared to 41.2% held by PVBs (private sector banks)," it said, noting that private banks have focused on managing their elevated credit-deposit or CD ratio.
Time of India
30 minutes ago
- Time of India
PM reaches Cyprus; President Nikos Christodoulides receives Modi at airport
Prime Minister Modi's visit to Cyprus, the first in over two decades, aims to strengthen strategic ties, leveraging Cyprus's location and stance against Turkish expansionism. Discussions focused on Cyprus's role in the India-Middle East-Europe Economic Corridor and energy diversification. Both nations share similar views on international issues and support a UN-backed resolution for the Cyprus issue. Tired of too many ads? Remove Ads On his maiden trip abroad since Operation Sindoor , Prime Minister Narendra Modi on Sunday sought to expand India's strategic ties with Cyprus, taking advantage of its location in the Mediterranean region and its principled position on Turkish a significant gesture, Cyprus President Nikos Christodoulides received Modi at the airport. This is the first visit to Cyprus by an Indian PM in over two the President hosted the PM for the dinner, Modi engaged with business leaders eager to deepen partnership. Cyprus's maritime connectivity and strategic location position it as a potential hub in the India-Middle East-Europe Economic Corridor . Cyprus is a key player in Eastern Mediterranean natural gas exploration and can assist India in diversifying its energy sources. Cyprus' strong ties with Israel, Greece and Egypt could also lead to cooperation in the region. Cyprus will also hold the rotating presidency of the EU Council in whose northern part has been under Turkish occupation since 1974, has been among India's steadfast supporters on the Kashmir issue . Both countries support similar positions on major regional and international issues and have collaborated constructively in the UN, Commonwealth and other has consistently endorsed the solution of the Cyprus issue based on UNSC resolutions, international law and the EU acquis. India supports a bi-zonal bi-communal federation based on UN Resolutions as a solution to the Cyprus problem.
Time of India
41 minutes ago
- Time of India
Government to 'facilitate' auto companies procure Chinese magnet
This is an AI-generated image, used for representational purposes only. NEW DELHI: The government has stepped in to support the auto and component industry's efforts to procure rare earth magnets from Chin,a with companies submitting End User Certificate (EUC) to Beijing, certifying no diversion of the shipment towards defence or weapons production. The commerce department and the ministry of external affairs have been engaged in the process of seeking time for an interface of the Indian industry with representatives of the Chinese government. "We are mindful of the concerns of the industry, especially as manufacturing schedules are likely to be disrupted if the supplies do not resume in some time," one of the sources said. A senior government official said that commerce secretary Sunil Barthwal recently held consultations with auto sector representatives and over the next few weeks, a delegation of executives from industry bodies is expected to go to China, with the Indian embassy in Beijing facilitating the exercise. The government, however, wants to play the role of a "facilitator" in the process, clearly demarcating it from being seen as a G2G (government-to-government) negotiation. "The idea is to involve the respective stakeholders and ministries for a concerted effort to expedite the approval process. The industry has already submitted the requisite documents related to the matter." Local industry has argued it is working on developing capabilities, but it is seen to be a massive challenge. "Developing indigenous supplies and capabilities is crucial, but it's a complex process requiring large-scale investments. Also, mitigating challenges of radioactive materials during the extraction process is also a critical factor," said Alok Perti, former coal secretary and now a senior board advisor with B2B mining and metal industry body MMPI. "Providing viability gap funding like PLI schemes by the government, encouragement to undertake research with countries like Russia, Australia, is also relevant." Source said that auto industry bodies, the Society of Indian Automobile Manufacturers (Siam), that represents product companies as well as the Automotive Components Manufacturers Association (ACMA), have been carrying out direct interface with government on the matter, even while companies have submitted their petitions through the route mandated by the Chinese government. The applications have reached China, and companies are eagerly awaiting movement, officials of at least four large companies told TOI. The industry is hopeful of a "positive result" following the meetings that Chinese vice foreign minister Sun Weidong, who is on a two-day visit to India, has had with his Indian counterparts. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
