Indian fixed-income market offers attractive bond opportunities

Chirag Doshi, the Chief Investment Officer at LGT Wealth, recently shared insights on the Indian fixed-income market. He pointed out that medium to long-term bonds are currently attractive due to various economic factors. As of March 20, 2025, the yield on 10-year Government Securities (G-Secs) is stable at 6.63%. This stability is driven by a decrease in consumer price inflation, expectations for rate cuts by the Reserve Bank of India (RBI), and responsible fiscal policies by the government. Inflation trends show that the Consumer Price Index (CPI) fell to 3.61% in February, mainly because food prices dropped. However, the Wholesale Price Index (WPI) slightly increased to 2.38%, indicating rising costs for certain manufactured goods. Globally, the U.S. Federal Reserve did not change its interest rates during its recent meeting, keeping them between 4.25% and 4.50%. They have lowered their growth projections and expect unemployment to rise, which puts pressure on global bond markets. Doshi advises investors to focus on medium to long-duration bonds, as falling interest rates could increase their prices. He also recommends high-quality corporate bonds and state government bonds that offer higher yields than G-Secs. Investors may find opportunities in different bond types. AAA-rated corporate bonds, medium-duration G-Secs, and high-yield bonds from well-managed companies could be particularly appealing right now. Overall, the Indian fixed-income market seems promising. With lower CPI inflation and steady global policies, investors should consider a balanced approach that includes various bonds to manage risks and optimize returns.