Commentary
30th April 2021
Commentary
30th April 2021|
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GLOBAL MARKETS
Global equities traded higher with Europe
catching up with the US markets. PMIs
(Purchasing Managers' Index) confirmed
a few features - the global boom is taking
shape; it continues to exceed optimistic
expectations; and Europe is catching up
to the US. Q1 earnings are beating high
expectations in the US and Europe. The
month confirmed two core elements:
that global growth leadership is rotating
from a decelerating China to a booming
US. EM (Emerging Markets) thus lags, but
aside from a China which will slow due to
deliberate policy tightening, others should
lift from midyear due to US/European pull
and domestic vaccine rollout.
Covid & Vaccines: Daily new cases surged over the month, with last 12 days registering >300,000/day. Last week of April appeared to be showing first signs of stabilizing around the 350,000/day mark, likely in response to the proliferation of local restrictions being imposed around the country. However, the last three days (Apr 30 - May 2) recorded a devastating increase, with new daily cases at 0.4/0.39/0.37million per day, respectively, as vaccination drive in some states gets hit by shortages of shots.
National positivity rates remain in the alarming 19-21% range. There is, however, rotation within the country - with states such as Kerala, Karnataka, UP and Tamil Nadu now witnessing increased stress. Yet, the declines seen in Mumbai (~4,000 from 10,000 two weeks back), Maharashtra (deceleration in pace of daily new cases) and some stagnation in Delhi recently creates a template and provides hope that the second wave will rapidly peak in most other parts of India.
Restrictions: 6 states/UT (union territories) accounting for 1/3rd of India's GDP announced stringent lockdowns and states/UT accounting for half of India's GDP announced weekend lockdowns along with night curfew. All these led to an across the board fall in mobility to levels last seen in Oct'2020.
Vaccination: The absolute pace of vaccinations has slowed from 3.4 million/day to 2.5 million/day over the last 10 days; about 9.15% of India's population has received at least one dose. India announced the next phase of vaccinations wherein all citizens above the age of 18 years would be eligible from May 01, 2021. However, shortage of vaccines meant a delay in implementation. To bridge the gap, government decided to fast-track approvals of vaccines cleared for use in the US, UK, EU (European Union) and Japan and allowed states / private players to procure the vaccines (upto 50% of supply) directly from the manufacturers.
Oxygen Crisis: Rapid increase in Covid cases led to a severe shortage of medical oxygen in the country, despite all the efforts to divert the supplies from industries to hospitals. Government decided to import more than ~10,000 oxygen concentrators and sanctioned ~500 new oxygen plants to be set up under PM Cares Fund.
Covid & Vaccines: Daily new cases surged over the month, with last 12 days registering >300,000/day. Last week of April appeared to be showing first signs of stabilizing around the 350,000/day mark, likely in response to the proliferation of local restrictions being imposed around the country. However, the last three days (Apr 30 - May 2) recorded a devastating increase, with new daily cases at 0.4/0.39/0.37million per day, respectively, as vaccination drive in some states gets hit by shortages of shots.
National positivity rates remain in the alarming 19-21% range. There is, however, rotation within the country - with states such as Kerala, Karnataka, UP and Tamil Nadu now witnessing increased stress. Yet, the declines seen in Mumbai (~4,000 from 10,000 two weeks back), Maharashtra (deceleration in pace of daily new cases) and some stagnation in Delhi recently creates a template and provides hope that the second wave will rapidly peak in most other parts of India.
Restrictions: 6 states/UT (union territories) accounting for 1/3rd of India's GDP announced stringent lockdowns and states/UT accounting for half of India's GDP announced weekend lockdowns along with night curfew. All these led to an across the board fall in mobility to levels last seen in Oct'2020.
Vaccination: The absolute pace of vaccinations has slowed from 3.4 million/day to 2.5 million/day over the last 10 days; about 9.15% of India's population has received at least one dose. India announced the next phase of vaccinations wherein all citizens above the age of 18 years would be eligible from May 01, 2021. However, shortage of vaccines meant a delay in implementation. To bridge the gap, government decided to fast-track approvals of vaccines cleared for use in the US, UK, EU (European Union) and Japan and allowed states / private players to procure the vaccines (upto 50% of supply) directly from the manufacturers.
Oxygen Crisis: Rapid increase in Covid cases led to a severe shortage of medical oxygen in the country, despite all the efforts to divert the supplies from industries to hospitals. Government decided to import more than ~10,000 oxygen concentrators and sanctioned ~500 new oxygen plants to be set up under PM Cares Fund.
Domestic Markets
Domestically, Indian equities ended flat over the month. The failure to sever the link between mobility and the virus led Indian equities to lose ground for the first half of the month as rising Covid-19 cases hurt market sentiment. But, with India's second wave close to peaking now and aggregate country daily cases growth slowing, India closed some of its underperformance with EM over the latter weeks.
MSCI India (USD) fell 1.0% in April and underperformed peers MSCI AC Asia Pacific ex Japan Index (+2.8%) and MSCI EM (+2.4%) as daily new cases surged over the month, with last 12 days registering >300,000 cases/day. Mid-caps and Small-caps were up 2.1% and 5.6%, respectively; outperforming large caps in April.
Capital Flows: FPIs turned net-sellers for the first time in 2021 as the healthcare infrastructure of the country appeared to be overwhelmed with news reports of shortage of hospital beds, oxygen and medical supplies made the headlines. FPIs recorded net outflows of USD1.1bn into Indian equities in April. Q1 saw USD7.3bn of inflows. This followed the highest quarterly inflows by FIIs in 4QCY20 (USD19.4bn). On the contrary, FIIs remained net sellers in the debt markets with outflows of USD243mn in April (vs. outflows of USD543mn in March).
DIIs remained net equity buyers in April (+USD1.5bn vs. +USD0.7bn in Mar'2021). Both Mutual funds (+USD796mn) and Insurance funds (+USD503mn) were net buyers in April 2021.
Bond Markets and Currency: Benchmark 10-year treasury yields averaged at 6.06% in April (13bp lower vs. March avg.). On month end values, the 10Y yield was down 14bps to end the month at 6.03%. US 10Y yield is at 1.63% (-11bps m-o-m, +99bps y-o-y).
INR lost 1.3% and ended the month at 74.09 per USD in April. INR substantially underperformed JPM EM FX (+1.3%) in April. In the last 12 months, INR (+1.4%) has underperformed the broader EM FX (+7.3%). DXY (US Dollar Index) fell 2.1% in April (vs. +2.6% in Mar'2021) and ended the month at 91.28 (-7.8% in the last 12 months).
India's Forex (FX) reserves are close to their all-time peak, standing at USD584bn currently. FX reserves have increased by USD4.8bn in the last 4 weeks.
Sectoral Impact
By sector, Metals, Healthcare and Telecom outperformed while both Capital Goods, FMCG and Auto were notable laggards in April.
Key Sectoral Trends:
▶ Financials1) All branches remain open for business, unlike last year, 2) Enquiries for (Emergency Credit Line Guarantee Scheme) ECLGS 3.0 and restructuring remain muted, 3) No major curbs on collections to report even at stressed district levels, 4) Heightened enquiries/disbursements for home loans and used car loans continue & 5) Additional caution now visible in bank lending to Microfinance, SME/ MFI-focused NBFCs and Small Road & Transport Operators (SRTOs) in vehicle finance. Hospitality, cab aggregators and educational institutions continue to be on the watch list.
▶ Auto: For April, PV (Passenger Vehicle) industry wholesale volumes are likely to be 11-12% lower m-o-m, while Two-Wheeler volumes are down ~25%. CV (Commercial Vehicle) volumes declined sharper by 50- 70% m-o-m (steeper decline for MHCVs vs. LCVs) as March is a seasonally strong month. Tractor volumes are down 12-14% m-o-m. As April-2020 was a washout, y-o-y volume comparison is not feasible.
▶ Pharma: 1) Demand for common cough/fever, anti-inflammatory steroids and multi vitamin drugs has gone up significantly, 2) Demand for anti-infectives is still weak across segments, 3) Higher demand in select chronic therapies like anti-diabetics & cardiac segment due to stock-out fear and 4) Stable non- Covid volume trends for diagnostics; Like last year, home collection options v/s walk-ins are preferred despite higher costs.
▶ Cement & Building Materials:: 1) Post a positive demand commentary in the first fortnight of April, palpable demand slowdown in trade segment for both cement/building material categories since April- 15th, 2) Price hikes taken at the start of April have started to taper off 3) Project and governmentrelated construction continue to provide better offtake in non-trade volumes & pipes for water supply projects under Jal Jeevan project.
The Macro Picture
Manufacturing PMI indicates margin compression faced by firms: April Manufacturing PMI at 55.5 vs. 55.4 last month. Companies scaled up production with further improvement in demand. Output and sales increased at a slower rate due to second wave of Covid, but there was a faster upturn in international orders.
Inflation: March CPI accelerating to 5.5% y-o-y, from 5% in February 2021. Within the CPI report, all eyes were on core-core momentum, after two consecutive times elevated (0.5% m-o-m) prints in January and February 2021. As it turns out, momentum took a breather in March easing to 0.2% m-o-m. As a consequence, core decelerated to 5.2% y-o-y in March from 5.5% in February 2021.
Industrial Production (IP): IP printed at -3.6% y-o-y for February 2021. Sequentially IP rose by 0.8% m-o-m in February - a third consecutive increase. In level terms, therefore, industrial production continued to recover and inched up to 98% of its pre-pandemic level from 97% in January 2021.
Fiscal Deficit: Fiscal deficit for Apr'2020-Feb-2021 was INR14.1tn or 76% of the budgeted FY21 deficit (INR18.5tn). This compares to 111% reached during the same time frame in FY20.
Growth Outlook: The Economist Intelligence Unit has estimated India's economic growth for 2021 at 13% y-o-y, higher than all major economies. Fitch Ratings has affirmed BBB- sovereign rating for India with a negative outlook, saying that second wave of novel coronavirus may delay economic recovery. It has also forecasted GDP growth in FY22 at 12.8%, moderating to 5.8% in FY23, from an estimated contraction of 7.5% in FY21 with downside risks to the FY22 outlook due to Covid-19. Similarly, S&P Global Ratings has forecasted India's GDP growth rate at 11% in 2021-22.
GST collections: GST collections in April hit a record monthly high of INR1.41tn (from INR1.24tn in March, +14.1% m-o-m). This was the 7th consecutive month with collections of more than INR1tn. Collections in April 2021 saw an improvement not just on a y-o-y basis due to a weak base, but also on a 2-year basis at 11.4% vs. 7.8% in March 2021. This was led by strong growth in both domestic and import GST.
RBI delivers a dovish hold: The Committee voted unanimously to keep rates on hold. It also reiterated its accommodative stance and moved from time-based guidance to more state-based guidance. The dovish hold was despite the MPC nudging up its inflation forecasts for the rest of the year, with headline CPI inflation expected at 5.2% y-o-y across 2Q and 3Q21, 4.4% in 4Q21, and 5.1% in 1Q22. The RBI appears to be worried about core inflation.
Commodities: The Brent oil price rose 6% in April, following a 3.1% decline in March. Prices touched USD68/bbl on April 29, 2021 the highest close in 6 weeks as strong US economic data, a weak dollar and expected demand recovery outweighs concerns over higher Covid-19 cases in Brazil and India. We believe, as economies reopen over the course of 2Q and 3Q, the world will rotate from buying metals-intensive goods to spending money on oil-intensive services, like driving to eat out, visit friends and traveling.
Other Key snippets:
▶ State Elections: Out of the 5 state elections in April, 3 states (West Bengal-TMC, Assam-BJP, Kerala- LDF) voted for a return of the present ruling parties in a pro-incumbency move.
▶ Indian Banks: The RBI issued a directive as part of its earlier review of the Corporate Governance framework at banks. As per the circular, the post of MD and CEOs or whole-time directors at banks cannot be held for more than 15 years. Founders/major shareholders cannot hold the post for more than 12 years (15 years with special approval). However, the existing terms of the current MDs and CEOs will be allowed to be completed.
▶ Aviation: The Directorate General of Civil Aviation (DGCA) has extended fare capping on domestic flights until May 31. The aviation authority has also limited flight capacity of domestic flights at 80% of pre -Covid-19 levels until May 31. Also last month, DGCA in a circular said that suspension of international flights has been further extended until April 30.
▶ Expectations of a normal monsoon: The IMD expects monsoon to be normal at 98% of the Long Period Average (LPA), with error of +/-5%. Skymet Weather expects the monsoon to be 'healthy normal,' assessed at 103% of LPA, with error margin of +/- 5% in the company's prediction.
▶ Citibank exits India-retail business: Smaller private banks that are keen to expand footprints may find Citibank's portfolio a good buy. Spends per card in Citibank's credit card portfolio have remained 15-20% higher than its peers. Citibank's deposit franchise too is not chump change, with total deposit book at INR1.6tn as of March 2020.
Outlook
Global markets, especially US and now Europe are sustaining at elevated levels, boosted by strong Jan- Mar'2021 quarterly results. However, valuations are a concern across all markets. Elevated levels of earnings growth being forecasted for CY2021 and CY2022 are also a concern. Even the news of a proposal to raise Capital Gains tax in the US to fund the Infrastructure program to be announced by President Biden has not impacted market sentiments. The swift pace of vaccination in the US, clearly places it as the engine of global growth, at least for the next year or so. Continental Europe, despite vaccination, also has emerged as a region of growth, perhaps boosted by the low base effect of CY2020.
This brings us to India. Clearly, the ferocity of the second wave has caught most by surprise. Not only the numbers - roughly 5-6x daily cases of the 1st wave, it is the speed with which the virus spread to the hinterlands, which is an added cause for worry. FY2021's economic growth was largely attributed to a resounding "Bharat", unimpacted, acting as a counter weight to an "under siege" Urban India. FY2021 was the story of B30 and beyond. What will save FY2022? This time the wave is "All India". Thankfully, the rate of new case addition has slowed in May. The length of the second wave, will surely have a direct impact on FY2022 earnings. Equally important factor which may impact profitability across sectors is the commodity price rise - from Hot Rolled (HR) coils to PVC (Polyvinyl chloride), from Cotton yarn to rare metals (used in catalytic converters in passenger vehicles) the price rise over the last six months has been stupendous ranging from 40-80%. Passing on these cost push could impact a nascent consumer recovery or severely dent the bottom line of the user industries. Such a factor may also cause, the nascent cycle of upgrade, which was strongest after Dec quarter 2020 results, to take a pause. Since Q1 FY2021 was a historic low in terms of corporate earnings, any blow arising from a decline in activity caused by the second wave would be softened by this low base effect. Hopefully, a normal monsoon and some positive news on the Covid front - vaccine supply ramping up - from July onwards could help revive economic activity around the festival season. Hope, remains eternal.
Meanwhile, take extra precaution, pray, eat well and get vaccinated.
WHAT WENT BY
Bonds continued their positive performance during the month of April, albeit the curve witnessed
some steepening bias as market participants pushed back the possibility of RBI's exit from the extraordinary
accommodative measures to late 2021 due to the onset of second Covid-19 wave. The
5-year government bond benchmark declined 20bps from 5.97% to end the month at 5.77% while
the 10-year benchmark fell 14bps to end the month at 6.03%. The INR 1 trillion OMO purchase (GSAP
1.0) announced by the MPC for 1QFY22 was also taken positively by the market. The cancellation
of 5 year and 10-year auctions triggered short covering rallies and the announcement of INR 100bn
operation twist on top of the GSAP 1.0 purchase program boosted market sentiment.
CPI inflation rose above expectations in March'21 at 5.5% (consensus: 5.4%) y-o-y vs. 5.0% in February'21 primarily driven by higher food & beverages and fuel inflation, while core inflation moderated on the margin. Industrial production (IIP) growth fell to -3.6% y-o-y (consensus: -3% in February'21 vs -0.9% in January'21 (revised up from -1.6%), weaker than expected.
WPI inflation increased to series-high of 7.4% in March'21 compared to 4.2% y-o-y in February'21. The rise was broad based mainly on account of hardening of fuel, manufacturing items prices. Manufacturing inflation increased to 7.3% y-o-y.
The gross GST revenue was at INR 1.41trn in Apr'21, up 14% m-o-m, the highest since the introduction of GST. Higher compliance and resilient economic activity till March'21 helped in record collection. The future collection momentum might need to be re-considered in light of the various localized lockdowns.
The MPC minutes released on 22nd April'21 re-affirmed the April MPC resolution where increasing growth uncertainty due to risks of 2nd wave was acknowledged and need for monetary policy support till a durable growth trajectory was achieved. While members acknowledged the upside risks to inflation, they attributed the rise due to commodity price pressures and expected limited spillovers due to healthy corporate profitability & smoothening of supply chains in the long term.
US President Biden laid out his 3rd stimulus proposal: USD 1.8trn that includes new spending on childcare, education and paid leave and extensions of some tax breaks. This was after passing the USD 1.9trn fiscal stimulus in March'21 followed by a USD 2.25trn infrastructure spending program that was proposed about a month back.
The FOMC decided to keep target range for federal funds rate unchanged at 0%-0.25% and to continue with at least USD 120bn of monthly asset purchases. Chairperson Powell repeated that it will still be "some time" before substantial further progress is made and tapering of asset purchases is appropriate. He continued to emphasize that inflationary pressures are transitory and surmised that persistently stronger inflation and inflation expectations are unlikely while the labor market has not fully recovered.
The RBI announced a raft of measures today to provide support to the broad economy on 5th May, 2021 to mitigate the economic impact of 2nd wave. The measures were announced aimed at incentivizing credit flow to high priority areas currently as well as to smaller and more susceptible balance sheets. Measures also included extensions of previous dispensations as well as additional fiscal flexibility to states. (Please refer our 5th May'21 note, https://idfcmf.com/article/4583) for further details)
As opposed to last year when everyone was more or less in the same boat, this time around growth recoveries are at multi-speeds around the world reflecting largely different intensities in the fiscal plus vaccine responses. Notably, the US has delivered a staggeringly large fiscal response and lately seems to be vaccinating rapidly as well. These combined will lead to much-above potential growth this year as well as maybe next in that country. This is leading to substantial worries about at least temporary spurts in inflation even as the Fed is taking a very patient stance and has a somewhat different assessment of the situation. Thus, it has so far expressed a view that the price rise will be temporary and that it will likely look through it. Nevertheless, there are distinct worries about imported tightening for emerging markets in an environment like this. Indeed, we had spent considerable time analyzing this in our post policy note in April ( https://idfcmf.com/article/4383) given that we see this as the only meaningful risk to our bond view as of now.
Despite these potential global risks, the RBI still sees itself as having the room to make this commitment. The governor noted in his closing remarks while announcing the measures in light of the second wave that the RBI stands "in battle readiness to ensure that financial conditions remain congenial and markets continue to work efficiently" and that it is "committed to go unconventional and devise new responses as and when the situation demands". This is reminiscent of the earlier urgency expressed around the first wave, and constitutes a departure from the more recent 'steady as she goes' supportive approach, in our view. The change should be logical since for the past few months the job was to support a recovery that was already getting well entrenched as the system was looking forward to progressively opening more and more. Whereas, the new wave has now put brakes to some of this even as the economic impact is nowhere as close to what occurred in the first quarter of last financial year.
Market participants may derive comfort from the somewhat open-ended commitment that the RBI seems to have towards an orderly evolution of the yield curve. We will note again here that this doesn't mean that it is trying to target yields at a certain number or even that it doesn't want yields to go up. But as discussed before, so long as yields rise in a gradual and orderly fashion there is enough carry-adjusted-duration cushion available at intermediate duration points of the yield curve (upto 5 - 6 years).
Disclaimer: MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.
The Disclosures of opinions/in house views/strategy incorporated herein is provided solely to enhance the transparency about the investment strategy / theme of the Scheme and should not be treated as endorsement of the views / opinions or as an investment advice. This document should not be construed as a research report or a recommendation to buy or sell any security. This document has been prepared on the basis of information, which is already available in publicly accessible media or developed through analysis of IDFC Mutual Fund. The information/ views / opinions provided is for informative purpose only and may have ceased to be current by the time it may reach the recipient, which should be taken into account before interpreting this document. The recipient should note and understand that the information provided above may not contain all the material aspects relevant for making an investment decision and the security may or may not continue to form part of the scheme's portfolio in future. Investors are advised to consult their own investment advisor before making any investment decision in light of their risk appetite, investment goals and horizon. The decision of the Investment Manager may not always be profitable; as such decisions are based on the prevailing market conditions and the understanding of the Investment Manager. Actual market movements may vary from the anticipated trends. This information is subject to change without any prior notice. The Company reserves the right to make modifications and alterations to this statement as may be required from time to time. Neither IDFC Mutual Fund / IDFC AMC Trustee Co. Ltd./ IDFC Asset Management Co. Ltd nor IDFC, its Directors or representatives shall be liable for any damages whether direct or indirect, incidental, punitive special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information.
CPI inflation rose above expectations in March'21 at 5.5% (consensus: 5.4%) y-o-y vs. 5.0% in February'21 primarily driven by higher food & beverages and fuel inflation, while core inflation moderated on the margin. Industrial production (IIP) growth fell to -3.6% y-o-y (consensus: -3% in February'21 vs -0.9% in January'21 (revised up from -1.6%), weaker than expected.
WPI inflation increased to series-high of 7.4% in March'21 compared to 4.2% y-o-y in February'21. The rise was broad based mainly on account of hardening of fuel, manufacturing items prices. Manufacturing inflation increased to 7.3% y-o-y.
The gross GST revenue was at INR 1.41trn in Apr'21, up 14% m-o-m, the highest since the introduction of GST. Higher compliance and resilient economic activity till March'21 helped in record collection. The future collection momentum might need to be re-considered in light of the various localized lockdowns.
The MPC minutes released on 22nd April'21 re-affirmed the April MPC resolution where increasing growth uncertainty due to risks of 2nd wave was acknowledged and need for monetary policy support till a durable growth trajectory was achieved. While members acknowledged the upside risks to inflation, they attributed the rise due to commodity price pressures and expected limited spillovers due to healthy corporate profitability & smoothening of supply chains in the long term.
US President Biden laid out his 3rd stimulus proposal: USD 1.8trn that includes new spending on childcare, education and paid leave and extensions of some tax breaks. This was after passing the USD 1.9trn fiscal stimulus in March'21 followed by a USD 2.25trn infrastructure spending program that was proposed about a month back.
The FOMC decided to keep target range for federal funds rate unchanged at 0%-0.25% and to continue with at least USD 120bn of monthly asset purchases. Chairperson Powell repeated that it will still be "some time" before substantial further progress is made and tapering of asset purchases is appropriate. He continued to emphasize that inflationary pressures are transitory and surmised that persistently stronger inflation and inflation expectations are unlikely while the labor market has not fully recovered.
The RBI announced a raft of measures today to provide support to the broad economy on 5th May, 2021 to mitigate the economic impact of 2nd wave. The measures were announced aimed at incentivizing credit flow to high priority areas currently as well as to smaller and more susceptible balance sheets. Measures also included extensions of previous dispensations as well as additional fiscal flexibility to states. (Please refer our 5th May'21 note, https://idfcmf.com/article/4583) for further details)
Outlook
As opposed to last year when everyone was more or less in the same boat, this time around growth recoveries are at multi-speeds around the world reflecting largely different intensities in the fiscal plus vaccine responses. Notably, the US has delivered a staggeringly large fiscal response and lately seems to be vaccinating rapidly as well. These combined will lead to much-above potential growth this year as well as maybe next in that country. This is leading to substantial worries about at least temporary spurts in inflation even as the Fed is taking a very patient stance and has a somewhat different assessment of the situation. Thus, it has so far expressed a view that the price rise will be temporary and that it will likely look through it. Nevertheless, there are distinct worries about imported tightening for emerging markets in an environment like this. Indeed, we had spent considerable time analyzing this in our post policy note in April ( https://idfcmf.com/article/4383) given that we see this as the only meaningful risk to our bond view as of now.
Despite these potential global risks, the RBI still sees itself as having the room to make this commitment. The governor noted in his closing remarks while announcing the measures in light of the second wave that the RBI stands "in battle readiness to ensure that financial conditions remain congenial and markets continue to work efficiently" and that it is "committed to go unconventional and devise new responses as and when the situation demands". This is reminiscent of the earlier urgency expressed around the first wave, and constitutes a departure from the more recent 'steady as she goes' supportive approach, in our view. The change should be logical since for the past few months the job was to support a recovery that was already getting well entrenched as the system was looking forward to progressively opening more and more. Whereas, the new wave has now put brakes to some of this even as the economic impact is nowhere as close to what occurred in the first quarter of last financial year.
Market participants may derive comfort from the somewhat open-ended commitment that the RBI seems to have towards an orderly evolution of the yield curve. We will note again here that this doesn't mean that it is trying to target yields at a certain number or even that it doesn't want yields to go up. But as discussed before, so long as yields rise in a gradual and orderly fashion there is enough carry-adjusted-duration cushion available at intermediate duration points of the yield curve (upto 5 - 6 years).
Disclaimer: MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.
The Disclosures of opinions/in house views/strategy incorporated herein is provided solely to enhance the transparency about the investment strategy / theme of the Scheme and should not be treated as endorsement of the views / opinions or as an investment advice. This document should not be construed as a research report or a recommendation to buy or sell any security. This document has been prepared on the basis of information, which is already available in publicly accessible media or developed through analysis of IDFC Mutual Fund. The information/ views / opinions provided is for informative purpose only and may have ceased to be current by the time it may reach the recipient, which should be taken into account before interpreting this document. The recipient should note and understand that the information provided above may not contain all the material aspects relevant for making an investment decision and the security may or may not continue to form part of the scheme's portfolio in future. Investors are advised to consult their own investment advisor before making any investment decision in light of their risk appetite, investment goals and horizon. The decision of the Investment Manager may not always be profitable; as such decisions are based on the prevailing market conditions and the understanding of the Investment Manager. Actual market movements may vary from the anticipated trends. This information is subject to change without any prior notice. The Company reserves the right to make modifications and alterations to this statement as may be required from time to time. Neither IDFC Mutual Fund / IDFC AMC Trustee Co. Ltd./ IDFC Asset Management Co. Ltd nor IDFC, its Directors or representatives shall be liable for any damages whether direct or indirect, incidental, punitive special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information.
