RBI’s Liquidity Pledge Spurs Demand for Shorter India Bonds

Added short-end bond positions after RBI review: Kotak
Reverted to overweight position on 6-9 year bonds: IDFC Asset

Pedestrians walk under power cables near the Reserve Bank of India (RBI) headquarter building in Mumbai, India, on Monday, Oct. 12, 2020. India’s financial capital saw its biggest power outage in decades because of a grid failure, disrupting transport networks and hitting trading volume in equities and bond markets.Photographer: Dhiraj Singh/Bloomberg

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By Kartik Goyal

December 9, 2020 at 1:31 AM UTC

Updated on

December 9, 2020 at 8:26 AM UTC

This article is for subscribers only.

Bullish bets on India’s short-term bonds are making a comeback after the central bank pledged to maintain abundant liquidity in the banking system to support the economy.

The Reserve Bank of India surprised bond traders on Friday when it didn’t take steps to pare back on the cash glut that caused short-term rates to collapse. Instead, it reiterated liquidity support for the debt market with instruments including open-market bond purchases.