Where to invest in bonds? ideas for 2023

Liquidity in the banking sector has eased significantly and credit growth remains strong at 17%. In addition, deposit growth has accelerated with nationalized banks aggressively raising their deposit rates. According to experts, this could make them incremental buyers of government securities and corporate bond in the next financial year at the short and medium end of the yield curve.

“The government borrowing system will be concentrated at the long end of the yield curve to reduce rollover risk. The rate cut should benefit the short and medium end of the yield curve. The 2 to 5 year segment is attractive as there is scope for higher accumulation and capital appreciation when the rate cut cycle kicks in after one year. Investors can invest in short term, corporate bonds and banking and PSU funds, which primarily invest in this segment,” said Murthy Nagarajan, Head Fixed Income, Tata Mutual Fund, sharing his outlook for 2023.

India CPI inflation has already come down from the initial level of 6% and is expected to ease further in the coming months. Hence, the RBI may go for a longer pause in rates, Nagarajan said.

Abhishek Bisen, head of fixed income at Kotak Mahindra AMC, said, “Indian debt investors should buy bonds in the middle of the yield curve as this will help them weather any volatility in the backdrop of upcoming huge debt supply and higher interest rates.” Reuters.

Deepak Agarwal, chief investment officer of fixed income at Kotak Mahindra AMC, told Reuters that they would continue to prefer the middle part of the yield curve (3-year-7-year segment) for government and corporate bonds in view of the flatter yield curve . , adding that since interest rates have risen significantly during the year, they are only gradually increasing the buying of long-term bonds from the corporate side.

The views and recommendations given above are those of individual analysts or broking companies and not of Mint.