By Murthy Nagarajan, Head – Fixed Income, Tata Asset Management
“RBI kept the repo rate unchanged at 5.25% and maintained its stance as Neutral. GDP growth has been revised to 6.60% from 6.90% and CPI inflation has been revised to 5.1% versus 4.4% projected in the previous policy meeting of April 2026.
With CPI inflation revised higher, we may expect a rate hike in the coming months. However, the bond market has already factored 3 rate hikes, with the ten-year yields trading at 7% levels.
The bonds market is expected to trade range bound in the coming months with ten-year yields trading at 7 percent. This can undergo change if Crude oil prices trade higher than 100 dollar per barrel on a sustained basis.
The ten-year yields is trading in the band of 6.96% to 6.99% levels as market players expected no repo rate hike by RBI.”