In an interview with Mint, Suyash Choudhary, head of fixed income at Bandhan AMC, says the Reserve Bank of India (RBI) is entering a rate-tightening cycle and that bond yields do not always move in step with RBI decisions. He cites global pressures, including competition for capital from massive AI spending, geopolitical risks and higher energy costs. He expects total hikes of 100–125 basis points, taking the repo rate to about 6.25%–6.50%, with much of this already priced into bond markets. For savers, higher yields can mean better real returns, though fund NAVs may dip when rates rise. He recommends keeping portfolio duration low, favouring high-quality short-duration options over chasing yield, and a debt allocation of around 40% alongside 60% in growth assets, with US debt funds kept to a small share due to currency risk.
Summary written by Upside AI from the original article. Read the source for full details.
Original headline: Bandhan AMC Suyash Choudhary on RBI rate hikes , bond yields , and debt strategy
Read the original on livemint.com ↗
Related news
- IMF warns bond yields could see a 'disorderly' spike as debt, inflation risks worsen
The IMF warned that government bond yields could spike in a disorderly way as rising inflation, mounting debt and AI-related borrowing pressure sovereign bond markets. Yields in several advanced economies have reached multidecade highs, driven partly by higher energy costs from the Middle East conflict, and global public debt is near its highest level since World War II. Hyperscalers’ share of global investment-grade bond issuance has risen to 10% from less than 1% since 2024, while hedge funds’ share of U.S. Treasuries rose to about 9% in 2025 from about 4% in 2022, which the IMF says leaves the market susceptible to a disorderly unwind. The fund also flagged “circular” AI financing: 14 disclosed deals since 2023 channeled about $300 billion of equity and $650 billion of debt, in exchange for $1.4 trillion of future revenue commitments.
- Rising bond yields and higher inflation leave the Fed trapped in a rate-hike dilemma
- RBI rupee defence comes at a cost as liquidity dries up , yields rise
- G - sec yields may rise further as RBI absorbs liquidity , global pressures persist : UBI
A report by Union Bank of India (UBI) says Indian government bond yields may face further upward pressure as the RBI keeps absorbing liquidity through OMO sales, FX swaps and reserve accumulation, amid expectations of more rate hikes and elevated global yields. As of October 14, the 10-year G-sec yield stood at 7.40%, up about 20 basis points from end-September, while the 30-year yield rose to 7.82% from 7.67%. Crude oil above USD 100 per barrel, high US Treasury yields and dollar strength continue to add to inflation and external-sector pressures. The rupee strengthened to around 95.04 per US dollar after the RBI's foreign exchange measures, but UBI said bond-market concerns remain.
- RBI may need to raise repo rate to 6 . 25 % as inflation risks persist : SBI Mutual Fund
SBI Funds Management says the Reserve Bank of India (RBI) may need to raise its repo rate to at least 6.25% to contain inflation risks, after the RBI lifted it by 25 basis points to 5.50% earlier this month. That level would imply another 75 basis points of increases, though the report gives no timeline. Retail inflation rose to 5.54% in September from 4.83% in August, while wholesale inflation climbed to 11.39% from 9.92%. The fund house says headline CPI remains about 120 basis points above the 4% target, and warns that high crude prices, possible food inflation and strong domestic demand could push inflation above the RBI's 6% upper tolerance limit for two consecutive quarters. It also notes that surplus banking liquidity could weaken the effect of rate hikes, and that rate cuts are off the table.
- RBI may need to raise repo rate to 6 . 25 % as inflation risks persist : SBI Mutual Fund
In its October 2026 Market Outlook, SBI Funds Management says the RBI may need to lift its repo rate to at least 6.25% to contain inflation risks, after raising it by 25 basis points to 5.50% earlier this month. That implies another 75 basis points of hikes with no timeline given, and the fund sees the near-term path as either a hike or a hold, with rate cuts off the table. Retail inflation rose to 5.54% in September from 4.83% in August and wholesale inflation to 11.39% from 9.92%, while the FY27 CPI forecast of 5.20% sits about 120 basis points above the 4% target. The RBI projects inflation at 6% in the third quarter and 5.7% in the fourth quarter of FY27, and the fund warns that elevated crude prices, food inflation and strong domestic demand could push it above the 6% upper tolerance limit for two consecutive quarters. It also cautions that surplus banking liquidity could weaken the effect of rate hikes, and the RBI's next Monetary Policy Committee meeting is scheduled for December 2-4.
Related markets
Latest news
- Meta Earnings: What To Look For From META
Meta Platforms (NASDAQ:META) will report earnings this Wednesday after the market closes. Last quarter, revenue reached $60.8 billion, up 28% year on year and above analysts' expectations, though revenue guidance for next quarter slightly missed forecasts; daily active users hit 3.6 billion, up 3.4%. The market expects revenue growth of 23.6% this quarter, slowing from 26.2% a year earlier, and analysts have generally reconfirmed their estimates over the past 30 days. Over the last month, consumer internet stocks have gained 1.3% on average, while Meta is down 4.8%.
- An AI bust could come from places investors arent watching , an economist says
Concerns about an AI bubble are growing, and TS Lombard's Dario Perkins warns that investors may be overlooking other risks. Debt among smaller cloud providers, model developers and suppliers could reach $2 trillion by the end of 2027. Perkins does not see this as a systemic risk, but warns that earnings disappointments and canceled orders could ripple through the ecosystem, and that a chip glut could follow over-ordering. Much of the industry's revenue growth still comes from spending within the AI ecosystem rather than from businesses and consumers outside it. He also flags political backlash, noting that ordinary people dislike AI and nearby datacenters, and warns that one high-profile accident could turn AI toxic.
- Yen jumps after JGB auction draws big demand , euro finds relief
The yen rose 0.2% to 158.15 per dollar in Asian trading after a 20-year Japanese government bond auction drew bids of 5.84 times the amount sold, well above the 4.01 times at the previous auction, and the yield fell 6 basis points to 3.71%. A State Street strategist said the record demand suggests sidelined cash is returning and that JGBs are becoming a relative haven from political and fiscal volatility in Europe, particularly France. Anti-government protests in France prompted curfews in several cities, while Italy said it would send 500 troops after two days of unrest, and the euro rallied 0.2% to $1.1234. Elsewhere, bitcoin slipped 0.3% to $81,674.25 and ether edged down 0.2% to $2,393.21.
- Unemployment rate dips to 4 . 7 % - but vacancies hit five - year low
Vacancies fell by 21,000 to 691,000 in the three months to September, the biggest drop since the three months to March and the lowest since July to September 2014 outside the pandemic, while unemployment dipped in the three months to August. Payroll numbers were down 66,000 over the year to September. The ONS said the fall was mainly among smaller firms struggling with higher labour costs, following rises in employer national insurance, the minimum wage and workers' rights. A CBI survey found labour costs and regulations were making it harder to create jobs, and firms urged the Chancellor not to add to their burden in the October 28 Budget. ICAEW's Suren Thiru said the labour market is 'running on idle' and unemployment could climb above 5 per cent, while Shadow Chancellor Andrew Griffith blamed Labour's 'Jobs Tax' and red tape.
- CNBC Daily Open: Tech rebounds in the U.S., but Asia isn’t buying it yet
U.S. tech stocks rebounded as the Nasdaq Composite rose more than 1% on Monday, with Nvidia up 1.4% and Tesla up 3.8%. In Asia, however, tech shares fell on Tuesday, with South Korea's Kospi down over 4% and Japan's Nikkei 225 down 1.6%. Nvidia also unveiled plans to back four German AI startups as part of its nearly $10 billion European investment commitment. Jenny Lee of Granite Asia said Asian companies are reaching IPOs much sooner, often at four to five years old, while Jio Platforms' Indian IPO saw its anchor investor quota oversubscribed more than 30 times, aiming to raise up to 302 billion rupees ($3.2 billion). In Singapore, several agricultural stocks fell after Senior Minister K Shanmugam warned that companies would not escape responsibility for possible roles in the haze, noting seven firms had been questioned by the Singapore Exchange.
- NiSource (NI) Stock Looks Overvalued Against Its Dividend Outlook
NiSource has nearly doubled shareholders' money over the past five years, delivering a 97.6% total return, which raises the question of whether dividends can justify the current share price. The article highlights a new 20-year energy agreement with Microsoft, including customer-funded grid upgrades and long-term electric service for data centers, which may affect future capital needs and cash-flow visibility. Using a Dividend Discount Model with inputs of about $1.35 dividend per share, roughly 9.07% return on equity, a payout ratio slightly above 61%, and implied dividend growth of about 3.5%, the estimated intrinsic value sits meaningfully below the current share price of $41.95. The model still does not bridge that gap, suggesting income investors are paying a premium for a relatively steady payout with modest assumed growth.
Get the briefing on Telegram or Zalo
Join the Upside Telegram channel or Zalo group for the Vietnam stocks and gold briefing at 8:00 and 19:00 (Vietnam time) on trading days, plus a weekly wrap on Saturday morning.