Interview With : Amandeep Chopra, Head of fixed income at UTI Asset Management Company (AMC)
Updated on: 25 Jun 2016
Going forward there will not be any aggressive rate cuts by the Reserve Bank of India (RBI), which will continue to maintain its 'accommodative stance' as mentioned in the policy, says Amandeep Chopra-head of fixed income at UTI Asset Management Company (AMC). In an interview with Chirag Madia, he also says that currently the company is recommending investors products like ultra short-term funds and short-term income funds. Excerpts:
What is your outlook on debt market?
When we started the current calendar year, we had three key worries. One was the hike in interest rates in the US, slowdown in China, and peripheral issues like Brexit and oil prices. While there were no rate hikes by the Federal Reserve (Fed) as envisaged, the concern will remain with us throughout the year. On China, people thought that the economy is stabilising, but again concerns are being raised and we need to keep an eye on further development. On local factors, we were worried about inflation, monsoons and fiscal deficit. Fiscal deficit trajectory in the Budget was a pleasant surprise, the monsoon started with a positive trend, but again with some delays questions are being raised on its impact on the economy. On inflation, we still have some concerns as it is not only tough to forecast inflation with accuracy, but we found it tough to assume a sustained benign inflationary trend in India. So, given all these parameters, our investment strategy was in the neutral or risk-off zone for the past few months. Even going forward, we are not looking at aggressive rate cuts by the Reserve Bank of India (RBI). But we believe RBI will continue to maintain its 'accomodative stance' as mentioned in its policy. We expect debt markets to be range bound in the near term, but we don't see any major reasons or fundamentals triggers for them to rally. We have to wait and watch some of the events in the coming months from both domestic and international fronts.
Where do you look 10-year benchmark yield settling down and where do you see interest rates heading?