India Debt to Avoid Sell Offs on RBI Steps: Reliance Nippon Life

Indian bonds may not sell off sharply even as the nation’s central bank unwinds stimulus measures because the monetary authority has been communicating its gradualist approach to participants, according to Reliance Nippon Life Insurance, Bloomberg News reported. “It’s a very transparent and calibrated approach the monetary policy committee is taking,” Jyoti Vaswani, chief investment officer at Reliance Nippon Life Insurance Ltd. said in an interview with Bloomberg TV. “As long as they are keeping the market informed and it’s orderly normalization, it won’t disrupt the market as India’s bond market has already priced in rate hikes.” While outlining measures to drain excess liquidity from the banking system earlier this month, Governor Shaktikanta Das assured that the central bank would take an “approach of gradualism” in normalizing monetary policy. The central bank is likely to hike its benchmark rate in the second half of 2022, according to Vaswani, who oversees 244 billion rupees ($3.2b) in assets. Indian bonds won’t be immune to inflationary pressure, which will likely keep pushing yields up, Vaswani said. Yields on benchmark 10-year government bonds climbed by about 28 basis points in the last month, driven by higher oil prices, rising U.S. Treasury yields, and the end of the Reserve Bank of India’s version of QE. Read more.